New Election Rules Required

Oct 27, 2019 0 Views 0 Comments

This week's newsletter will continue to focus on the problems created by SB 323 and the need to adopt new election rules to satisfy the burdensome requirements of the bill.

Next week, we hope to address Accessory Dwelling Units (ADUs). ADUs will have a significant impact on homeowner associations when it comes to short-term rentals, rules enforcement, parking, and increased burdens on common area amenities. HOAs will need to adopt policies to address these issues. -Adrian

 
Kudos #1. Thank you so much for your wonderful newsletter. You have provided so much valuable information. Thank you! -Sue Q.

Kudos #2. Thank you! Love your emails. So informative. -Susan S.
 
Kudos #3. Every reader of your excellent newsletter must salute the enormous time commitment you made to produce this newsletter today! Your personal time is valued and appreciated by all readers, I am sure. -Marilyn B.
 
RESPONSE: Not everyone appreciated my criticism of the bill. The folks who wrote this convoluted piece of legislation are fuming. I received hate mail for pointing out the flaws. One reader believes any criticism of Gov. Newsom for signing the bill is a right-wing plot. It's not--it's the Russians. They are behind the bill.
 
Kudos #4. Adrian, I love your humor. -Mary M.
 
RESPONSE: I have to credit my mother for that. She has a way of putting a smile on everyone she meets. All I am, I owe to her.
 
Kudos #5. Your group does a phenomenal job of keeping us apprised of laws regarding HOAs and POAs. Thank you again! -Maggie L.
 
Kudos #6. I am so sorry this passed. Thank you for all you do! -Christine R.
 
*****
ELECTION TIMELINE: In addition to all the other problems created by SB 323 (described in last week's newsletter), the election timeline is much more complex than I originally projected.
 
Fortunately, one of our senior attorneys, Wayne Louvier, updated the timeline posted on our website. You can find it here: 2020 Election Timeline. We will continue to tweak it as we parse out SB 323.
 
The complexity of the requirements imposed by the Center for California Homeowner Association Law (CCHAL) means most associations will be in technical violation of the law for most elections.
 
Boards should expect elections to now take 105 days instead of the 50 to 70 days under existing laws.
 
One more problem--the extended election cycle means recall elections cannot be completed in the 90-day window required by the Corporations Code. That will create its own set of problems. -Adrian
 
*****
As with last week's newsletter, there were more responses than we could print. Some had to be edited to make room for others.
 
Nightmare Bill #1. I think there is a typo in the first line of your timeline: "At Least 90 Days Prior to the Annual Meeting: Select 2 or 3 inspector(s) of elections." Shouldn't it be "1 or 3"? -James P.
 
RESPONSE: It’s those gremlins again. It should have said "1 or 3" inspectors.
 
Nightmare Bill #2. Can you please clarify whether or not SB 323 applies to those commercial associations that were organized under Davis-Stirling, rather than the CICID?
 
RESPONSE: SB 323 applies to residential and mixed-use (both residential and commercial) associations. Commercial CIDs originally organized under the Davis-Stirling Act are no longer under the Act. They are now exclusively under the Commercial and Industrial Common Interest Development Act (CICID Act).


Nightmare Bill #3. Does SB 323 allow nominations for vacant board positions from the floor at annual HOA meetings? Are we limited to the list of candidates circulated in advance of the meeting? -Steve W.

RESPONSE: You can still nominate candidates at the annual meeting if your election rules provide for it.

Nightmare Bill #4. So happy to have been smart enough to move out of California two years ago and be done with the SOCIALIST view of life! So, so, so HAPPY!!! -Francyne W.

RESPONSE: Uh-oh. Now I'm going to get hate mail from socialists.


Nightmare Bill #5. Does this mean management companies can no longer facilitate annual elections starting January 1, 2020? Does it have to state in the association's bylaws that only title holders can run for office? Or can anyone run for office? -Rosaline C.

RESPONSE: Management companies can help facilitate elections, they just can't serve as inspectors for associations they manage.

Prior to meddling by CCHAL, homeowners could decide for themselves the qualifications of directors. CCHAL's legislation overrides all HOA bylaw provisions in California so that only owners are qualified to serve on boards of directors. This harms small associations that need the flexibility to elect someone who is not on title, such as the spouse of an owner.


Nightmare Bill #6. Most of this baffles me. Wait a minute—all of it baffles me. -Dolores

RESPONSE: Don't feel bad. Law firms all over California are trying to unravel the maze of inconsistencies and problems created by SB 323. Many were identified in last week's newsletter. No doubt more will emerge starting January 1, 2020. The bill creates full employment for lawyers (both those who want to sue associations and those trying to protect them from litigation).

Nightmare Bill #7. It seems the least the legislature and governor could have done would have been to allow electronic voting. That would really make voting so much easier for both large and small HOAs. -Vanda H.

RESPONSE: In 2013, the Community Association Institute's California Legislative Action Committee (CAI-CLAC) sought to lower the cost of elections and increase voter participation by introducing a bill for electronic balloting. It received stiff opposition from you-know-who (CCHAL) and the bill died in the legislature. At some point, it may be submitted again and, hopefully, common sense will prevail.

Nightmare Bill #8. Please publish information on who is CCHAL and by that I mean who its members are if such is available. -Paul F.

RESPONSE: CCHAL stands for "Center for California Homeowner Association Law." According to "GuideStar," their office is located at 3758 Grand Avenue, Suite 56, Oakland, CA 94610 and their principal officer is Marjorie Murray.

CCHAL claims their primary purpose is to inform, educate and train the public about homeowner association issues, rights, and laws. Several years ago, I attended one of their training sessions to see what they were teaching. It was a course on how to sue homeowner associations, complete with forms to file with the court. Just what we need--more litigation.

There is no public membership list for CCHAL that I could find. It's a little ironic since CCHAL is passing legislation requiring HOAs to publish their members' email addresses. Maybe someone at CCHAL will publish their membership list and bring some sunshine to the organization.

I looked for a website for CCHAL but could not find that either. They seem a bit secretive. I'm sure some of CCHAL's members are well-meaning. However, judging from the legislation CCHAL pushes each year, it appears their leadership is hostile toward associations.


Nightmare Bill #9. Can HOAs vote to remove themselves from the Davis-Stirling Act? -Ron R.

RESPONSE: This is not an instance where you can vote with your feet. If you're a common interest development, you're under the Davis-Stirling Act and SB 323 applies.


Nightmare Bill #10. In federal/state/county/municipal elections there are entire manuals written on the subject of the handling of "provisional" ballots, yet nothing appears to be incorporated into SB 323??? -Hank J.

RESPONSE: No, nothing. I would keep that on the down low. Otherwise, CCHAL will float another bill. The result would be more convoluted legislation and entire manuals written on the subject. (On second thought, it would mean more employment for lawyers. I could hire another one just to write manuals.)

Nightmare Bill #11. While SB 323 may not be perfect, there are important issues it addresses. -Greg P.

RESPONSE: There is not a single important issue addressed by SB 323. If CCHAL had proposed something sensible like elections by acclamation (which would have reduced election costs), SB 323 could have been a useful bill.

Nightmare Bill #12. As president of an association, I send out informational posts to Nextdoor, regarding things like gate repairs, safety alerts and street and landscape maintenance. We are considering use of an internet group (groups.io) as an opt-in service. Since internet groups are email based, do we have to share our group membership list beyond the opt-in membership? -Jim L.

RESPONSE: If the email addresses are maintained by the association, yes, you will be required to share them.


Nightmare Bill #13. Just because some scofflaw decides to run for the board doesn't mean anybody has to vote for them, so why worry? And if somehow that scofflaw put on a magnificent campaign and was elected to the board, he/she has only 1 vote among the 5 or more board members. -Hank J.

RESPONSE: Cumulative voting and voter apathy can put scofflaws and their buddies on a board before anyone knows what happened. Then, thanks to cumulative voting, it's almost impossible to get them off. Director qualifications (before SB 323) kept that from happening. That is all gone now.

Nightmare Bill #14. We are a small HOA. Our occupant information sheet allows occupants (with signature) to allow or not allow their contact information to be published. Is this sufficient? Or is another statement: “I do not want to be included in published directory” required? Is there a Bill 323 for dummies? I desperately need help! -Ingrid T.

RESPONSE: If you have something in writing from each owner that clearly states their information cannot be published, you should be safe. Even so, I would update the form so owners can specifically opt out of the membership list.

Beyond the information published by HOA law firms around the state, there is no "SB 323 For Dummies" that I'm aware of. We will be updating everything on our website to explain the maze of conflicting changes (at least the stuff that makes sense).


Nightmare Bill #15. Our ballots are out for vote and will be counted on November 5. Am I correct that this new bill will affect next year's election but not this one in process? -Bill B.

RESPONSE: Since your election will be completed this calendar year, it is still under existing election laws. You will need new election rules well before your next election.


Nightmare Bill #16. One item that may be confusing is that you mention under old law CPAs could be the inspector, but your summary lends readers into thinking this no longer can be the case. As a CPA in the industry, I perform inspector services for many associations that I do not provide any other service for. -Steven S.

RESPONSE: CPAs can be inspectors of election--just not for associations for which they perform other services. The same is true for management companies--they can serve as inspectors of election so long as it's not for associations they manage.


Nightmare Bill #17. Senator Wieckowski is the one who brought this Bill up again after Jerry Brown vetoed it. He has no business being in the Legislature... I even wonder if he has ever lived in a condominium association... so what's his real reason for initiating it yet again??????? -Angela B.

RESPONSE: Sadly, Sen. Wieckowski seems to be closely aligned with CCHAL.


Nightmare Bill #18. Does this apply to all HOAs or just those under Davis-Stirling? Some HOAs are voluntary. -Judy B.

RESPONSE: It only affects Davis-Stirling associations. Voluntary non-CID associations are not affected.

Nightmare Bill #19. Should our HOA start planning now even though our election is not until next year? -Wayne M.

RESPONSE: Yes, especially if it's in the first quarter of 2020. The complexity of the new election timeline almost guarantees problems and technical violations, thus my concern over litigation exposure CCHAL created for associations. See Election Timeline. We will continue to add notes to the timeline to help associations reduce their exposure.

NEW
ELECTION RULES
 
Some of the changes imposed by SB 323 require action by associations. Failure to do so could result in significant legal consequences and cause the association to be out of compliance with applicable laws starting January 1, 2020.
 
As a result, law firms around the state are scrambling to put together packages to rewrite election rules for associations. We have done the same.
 
Because other legislation impacts creates the need for additional policies, we offer more than just election rules. See below and contact us for pricing.
RECOMMENDED
POLICIES


Restated Election Rules. Required for ALL associations pursuant to SB 323. All associations must adopt or change their election rules to conform to the changed laws. Any election conducted without compliant election rules will make any election subject to legal challenge and may result in monetary penalties and an award of attorney fees.

Restated Bylaws. For all associations in order to comply with SB 323 and establish consistency with the mandatory revised election rules. Amending bylaws at the same time as the election rules will ensure consistency and avoid member confusion and mistakes.

Membership List Policy. For all associations which communicate or intend to communicate with members by email. SB 323 makes member email addresses part of the association’s membership list, which is available to all members upon request. All associations should make members aware that their email addresses are subject to disclosure on 1/1/2020.

ADU Policy. For all associations with garages or 500 square feet or more of space in which an accessory dwelling unit (ADU) or junior accessory dwelling unit (JADU) could be constructed. AB 670 voids prohibitions on ADUs and JADUs, but allows reasonable restrictions. This policy can be added to existing design guidelines or operate as a stand-alone policy.

Anti-Harassment Policy. For all associations as a result of the adoption of new DFEH Regulations. The changes add new requirements for associations to investigate and take action on claims made by protected classes of people.

Employee-Independent Contractor Analysis. For all associations utilizing independent contractors in order to determine whether they may meet the new test for being classified as an employee.

Elevated Structures Inspection Policy. For all condominium projects with exterior balconies and other elevated structures.


Electric Vehicle Charging Station Policy. For associations with common area parking in which an owner might wish to install an electric vehicle charging station.

Solar Policy. Sets forth requirements for individual owners’ installation of solar energy systems. This is especially important where the association is responsible to maintain, repair and replace roofs.

Communication Policy. Includes procedures for handling member/resident communications and helps to alleviate the inefficiencies associated with handling requests from difficult members/residents who unreasonably and disproportionately utilize the association’s time and resources.

Disability Accommodation Request Policy. Includes procedures for handling disability accommodation requests.

CC&R Restatement. If an association has not updated its governing documents in the last 10 years, it is usually more cost effective and beneficial to do a full restatement to comply with new laws.

CONTACT US if you have questions about our recommendations or would like pricing from our a la carte menu of policies.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Waive Coronavirus Assessments?

Mar 26, 2020 0 Views 0 Comments

Over the past few days, I've received a large number of emails from board members asking about delinquent assessments related to the pandemic. Should boards waive late fees and interest? Should they waive assessments for a month, three months, longer? Should they waive for some members but not others?

Balancing Board Duties. Boards have a fiduciary duty to keep their associations operational. That means paying utility bills, paying for insurance, maintaining the property, responding to emergencies, maintaining security, paying vendors, etc. At the same time, boards need to balance these obligations against the fact that increasing numbers of members cannot pay their assessments because of the pandemic.

Late Fees & Interest. Members have been laid off through no fault of their own. Accordingly, boards should immediately suspend late fees and interest on all delinquent accounts related to the coronavirus. Older delinquencies having nothing to do with the pandemic can be treated differently. With those accounts, boards can choose to continue late fees, interest and foreclosures.

Foreclosures. While liens can be recorded against new delinquencies, no foreclosure actions should be initiated against them. With older delinquencies, it may be appropriate to move forward with foreclosure actions, up to and including selling units. This would be the case for delinquencies that predate the coronavirus where there is no chance the person will pay the delinquent amounts. For others, foreclosure actions might move forward to the point of sale and then stop if amounts owed will be paid.

Waive All Assessments? Waiving assessments altogether is compassionate but also problematic. As noted above, boards have a duty to keep the association operational and pay its bills. It can't be done if no one pays their assessments. What about waiving assessments for delinquent members only? This presents a different problem. Do you waive for delinquent accounts that have nothing to do with the coronavirus? That would not be prudent. Forgiving assessments for those laid off because of the coronavirus is easier to defend but still a problem.

Waive Some Assessments? How do boards decide which ones are pandemic related? How long do they waive assessments? What if there is a rolling waive of layoffs for months to come because of the virus? At what point do boards stop waiving assessments? Also, waiving them creates a budget shortfall that increases the financial burden on everyone else. The best solution is to work out payment plans with members laid off from work.

Payment Plans. Fortunately, most (hopefully all) layoffs will be temporary. The coronavirus will soon peak, stay-at-home orders will be lifted, businesses will restart, and workers rehired. In addition, last night's approval by the Senate of a $2 trillion stimulus package includes cash payments to individuals hurt by the epidemic. Boards should work out payment plans on a case-by-case basis with members. Each will be a little different depending on how long the person has been laid off. Boards should be balanced and reasonable in their payment plans.  

Reduced Fees? Readers wrote that some owners were demanding a reduction in assessments since they could not use the association's amenities such as the pool, spa, fitness center, tennis courts, etc. Boards should politely decline all such requests. The loss of use is temporary. Besides, how do boards calculate the amount of reduction and who do they give it to? Many members do not use the facilities or only use them occasionally. Should they get a reduction? Do those who use the facilities more often receive a greater discount than those who don't? This is a non-starter.

Conflict of Interest? What about board members who are delinquent? Can they vote on issues involving assessment relief? To avoid conflicts of interest, a director who is delinquent must recuse him/herself from votes involving their own delinquency. They can still vote on matters related to payment plans and foreclosures for others but may want to recuse themselves to avoid any appearance of conflict.

Steady the Ship. The storm will soon pass. Board members need to keep a steady hand on the ship's tiller. Homeowners need to be patient.

POOLS
AND HOT TUBS
 

Kids in the Pool. I asked the board to close down our two pools and spas. They refused stating, “With all the kids out of school, that could be a problem” which is exactly the problem. Children have no idea what social distancing means. Is there anything I can provide this board to help them understand what they are doing? -Marla M.

RESPONSE: My newsletters.

Pool Furniture #1. The board president put up a sign the pool area was closed per the city. The city did not close pool sitting areas. She has taken all the chairs and folded them and put them on one side of the pool area so no one can sit on them. I pay a lot of money to this association and want to know if I can at least go into the pool area to sit and get some sun. Are we prisoners in our complex because this woman makes us inmates? I understand the severity of this virus but as long as we practice good sanitation and common sense, should a person like this board president be allowed to rule because she likes control? -Diane C.

RESPONSE: Of course, control is the only reason she closed the pool. What other reason could there be?
 
Pool Furniture #2. People who go to the pool & spa areas typically also sit on the loungers, touch the pool/spa handrails, use the pool area shower, etc. Even if it was just going into and out of the pool, infection is still a risk even if water is not the vehicle for spread. Thanks for all that you do. -Brian K.


Pool Accidents. Thanks for great updates, especially regarding pools and spas. Our HOA of nearly 10,000 homes puts out emails on an almost-weekly basis—even in the non-Covid-19 era—about 24-hour pool closures to allow for sanitization following “accidents”. These are NOT slip, trip, or fall incidents! So, I cannot imagine why anyone would want to use a public pool or spa now. -Frank D.

ESSENTIAL BUSINESS


Management. As early as the week before CACM canceled the 2020 Southern California Law Conference, my staff was already observing strict sanitizing procedures for our office, including making arrangements for owners to continue interacting with my staff on a limited basis. As to the issue of being an essential business, common sense already answered that question for me even before consulting with corporate counsel. Legal counsel confirmed that management companies ARE essential businesses. Discussions took place as early as two weeks ago with many of our regular everyday vendors and again the issue of the essential business question was validated. We also mandated immediate implementation of strict compliance with sanitizing procedures and protocols for our various janitorial companies and onsite managers. Gyms and restrooms were closed and social distancing notices were posted in every building with elevators and lobbies. As always, you seem to hit the nail on the head. -Steven C.

Teleconferencing. Our company has been using Jitsi as a teleconferencing mechanism for some time and it works flawlessly and is free. Our staff has been disbursed from our brick and mortar building working remotely from home. All our systems are cloud based and we hold daily meetings with our staff so that we do not lose sight of our main concern, our clients. -Steve C.

Indoor Construction. We are a large condo complex in the Los Angeles area. We were in the midst of a new flooring project for the hallways in 7 buildings, replacing old dog urine stained carpeting with vinyl flooring. The vendor's crew completed 5 buildings, with 2 more to go. We suspended the work. Can we continue if the crew wears gloves and N95 masks, has no contact with owners and residents, and works only in the long wide hallways of the 2 remaining buildings? -Rick B.

RESPONSE: The work can be done safely. Whether it violates the Governor's stay-at-home order is the question. That is something you should discuss with your association's legal counsel.

Outdoor Construction. Just wondering what your position is on small construction jobs that do not interfere with residents directly. We are a stock cooperative with hundreds of units. Some contractors would like to continue working on out door projects: i.e. building storage cabinets in the carports for a few residents and another involves installing flooring in in an unoccupied unit. Although this is not essential work, it does provide income to these contractors and does not put any residents at risk. Should that sort of work be allowed? -Donna G.

RESPONSE: The virus is crushing the economy and putting people out of work. The outside work you described can be done safely. I see construction projects still in effect around the city. I don't think one or two guys working outside and following social distancing creates a violation. But, I'm just one person. You need to talk to your association's legal counsel for guidance.

MISCELLANEOUS


Tax Filings. Thank you for your newsletters, which allows us all to be kept up to date on covid-19. I have a few questions on property values in California. We live in an HOA community in Riverside county. Do you know if California will be re-assessing the property tax on properties in the near future?  Also, is the date to file taxes been pushed back to the middle of July or the middle of August? -Mike B.

RESPONSE: I've heard nothing about tax reductions. Keeping in mind that we live in California and judging from historical actions, taxes move in one direction only...UP. As for tax filings, the IRS extended its deadline for payment of taxes and tiling tax returns from April 15 to July 15. California did the same. You should check online to confirm.


Parking Lot Cocktails. As a former board member at an HOA of almost 500 units, I’ve always enjoyed your helpful newsletters, and now more than ever. I heard indirectly about this idea: within our complex, one neighborhood, sponsored by 2 tenants, having another social distancing social at 5:30 on Wednesday in the parking lot. Bring your own cocktails. Wondered what you thought about this, in particular, whether the BOD should actively discourage this and/or whether it creates any liability. It just seems like a bad idea and an unnecessary risk (what if more than 10 people show up? what if people don’t practice social distancing as they drink more). -Wilhelmina T.

RESPONSE: If they keep it under ten persons and maintain social distancing, they aren't in violation. If the state keeps everyone in lock down much longer, I might join them.


Annual Meetings. It will be very helpful if you could write an article on the essential importance of holding an HOA election and not cancelling or postponing that. Perhaps there are guidelines, only allow a small number of members. We need to cooperate with the wishes of the election company, but the show must go on... as they say. To be frank, we are concerned about board members that don't want changes. -Ted H.

RESPONSE: It's a business decision by the board whether to delay the annual meeting or not. To move forward, arrangements need to be made with the association's management company for printing and mailing of ballots, for hiring an inspector of elections, for the televised opening and counting of ballots, etc. That's assuming new SB 323 compliant election rules have been drafted and adopted. Logistically, this is all possible but it may result in election delays.


ELECTION RULES. Election RulesAll associations must adopt new election rules to comply with SB 323. Failure to do so could subject elections to legal challenge and may result in new elections, monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules. We offer them at an affordable fixed price.

KUDOS


That you are daily providing timely information that helps to navigate these scary times is an outstanding service and a model of everyone doing what they can, based on their abilities! -Kit

Love the mask. -Steve C.

Thank you for the continued communications in these challenging and fast-changing times. I think it’s been a great resource for folks in the industry. -Brian K.

Thank you for continuing to provide informative, useful and appropriately humorous advice during this crisis. We all need to adjust to keep moving forward, thanks for doing your part. -Edward F.

That's funny with a mask, great sense of humor, which is what we need. -Hector T.

Adrian, Thank you for DAILY updates on COVID-19’s effects in the HOAs! Greatly appreciated as an important reference on the issue. -Michael S.

Boards can contact us for friendly, professional advice.

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

Swimming Pools & Hot Tubs

Mar 24, 2020 0 Views 0 Comments

I received a number of questions about closing swimming pools and hot tubs.

CDC Guidelines. According to the CDC website: "There is no evidence that COVID-19 can be spread to humans through the use of pools and hot tubs. Proper operation, maintenance, and disinfection (e.g., with chlorine and bromine) of pools and hot tubs should remove or inactivate the virus that causes COVID-19."

US Masters. U.S. Masters Swimming is a national membership-operated nonprofit that provides membership benefits to nearly 65,000 swimmers across the country published information about swimming and the coronavirus. According to their website, the average amount of chlorine that’s in a pool will kill the virus--assuming the pool is properly maintained. The problem, however, is that people can become infected before they ever reach the chlorinated water.

Infecting Other Areas. If someone is infected, how many surfaces will they touch on a normal visit to and from the pool? Anything they touch will be contaminated. Others who are not infected will then touch those same surfaces and become infected. As the website noted, "You’re reaching for a door handle and using the card scanner or otherwise signing in. You’re getting changed and putting your clothes in a locker or on a bench. You’re touching a communal shower tap. If you use the restroom, that’s a whole other series of doors and surfaces to navigate. There’s plenty of places for a tiny, invisible virus to cling to and follow you home where it might infect you or a loved one."

Board Decision. According to news reports this morning, the virus is continuing to spread. Most associations have temporarily closed all recreational facilities, including pools, hot tubs and saunas. Before a board decides to reopen facilities, they should carefully consider how they can prevent the spread of the virus to residents who use the facilities.


Reserve Studies. Can you please provide your opinion on reserve study site visits? Do you think it is appropriate for a board to allow them at this time? -Steve J.

RESPONSE: Reserve study site visits are normally done by a single individual. The report they prepare is pursuant to statutory requirements so boards can prepare the association's budget and make disclosures as required by the Davis-Stirling Act. I see that as an essential service. If the reserve study professional follows health guidelines and maintains social distancing, I don't see a problem.


Painting Contractors. We are a large commercial paint contractor up in the Bay Area. Have you had any questions or found any information, specifically about painting contractors working on HOAs? -Jeff U.

RESPONSE: I have not found anything in any of the guidelines. If the painting is purely cosmetic, it can be rescheduled. If it's exterior work to make surfaces watertight to avoid leaks and dry rot, the work could be deemed essential. Boards should talk to their legal counsel about how best to proceed.


Street Sweeping. With California's Stay at Home order, we have many more cars in our community during the daytime. With street sweeping, our community tends to tow cars. Can the board suspend towing as an executive decision or do they need a board meeting? -John P.

RESPONSE: Associations should suspend towing and fines related to street sweeping while stay at home orders are in place. The suspension can be done by the association's president in consultation with fellow directors without the need for a board meeting.


Package Deliveries. USPS, UPS, and FedEx drivers have keys to our package room to drop off packages in our gated community. The manager & assistant have an app to scan the packages and notify residents to pick them up during daily office hours. In light of the pandemic, should the board suspend package deliveries? -T.

RESPONSE: Boards should not suspend package deliveries since may people receive medicines and other necessities via UPS and FedEx. If everyone maintains social distancing and regularly wipe down surfaces in the package room, it can be done safely.

Thank you Adrian. You are the voice of reason! -Susan D.
 
So grateful your newsletter. A voice of insight in chaos. Thank u!!! -Melinda J.
 
Thanks for the contractor info, Adrian! Stay healthy! -Elyse E.
 
Thanks for keeping our HOA and us informed. -Mary L.
Boards can contact us for friendly, professional advice.

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

HOA Vendors & the Coronavirus

Mar 22, 2020 0 Views 0 Comments

I've received a lot of questions the past few days about allowing vendors on properties. I consider most vendors to be essential to association operations and should be allowed to continue to perform their duties.

Management. It goes without saying that management companies are essential. Without them, you can't collect assessments pay bills, and coordinate repairs.

Pools. With pools and spas closed, maintenance workers may not need to come as often but they still need to keep the pool clean and chemicals balanced. You don't want the pool turning green. It's more expensive to fix something than it is to maintain it.

Roofs. What about roof maintenance, repairs and replacements? They're essential. If roofs leak, you have to repair the damage, plus deal with insurance issues, and face potential litigation. It is much less expensive to keep your roofs watertight. Roofers are not in member's units so social distancing is not an issue. If roofers are willing to work, I would let them. Keep in mind, you may need to bid replacements now, enter into contracts, and schedule repairs during the dry summer months before the next rainy season hits.

Landscaping. As with roofers, landscapers do their work outside. They keep sprinklers repaired, which keeps plants from dying. Pruning trees is important if it involves health and safety of the trees or people. Stopping landscape services might be possible for small projects. What about golf courses? If you stop all work, it will be very costly to get the course back in shape. 

Plumbers. If toilets are clogged or water lines leak, a plumber is s clearly essential. Keep them on speed dial.

Janitorial Services. Surfaces need to be wiped down, floors vacuumed or mopped, trash removed, and common area restrooms serviced. I consider this an essential service. If the workers wear protective gear and maintain social distancing, they should be allowed to do their jobs.

Contractors in Units. What about contractors hired by members working in their units? As long as they are in the person's unit I'm not inclined to interfere with the contractual relationship. The issue of concern may getting through the common areas to the unit. If contractors can use stairwells instead of elevators, I don't see an issue. If they need to use an elevator, they should be few in number and wear protective hear (masks and disposable gloves).

Resources. Following are COVID-19 guidelines from key sources:

California Guidelines
Centers for Disease Control and Prevention
Los Angeles Guidelines
Orange County Guidelines
San Diego Guidelines
San Francisco Guidelines

Disclaimer. The virus is moving faster than the law. This was passed to me and attributed to attorney Dan Eaton. If he said it, he is spot on. While I believe associations and their vendors can (and should) continue to operate if essential to operations and done safely, I can't guarantee someone else might strongly disagree. Boards should consult their association's legal counsel for guidance.
 


I received more emails than I could respond to. Following are some of them. -Adrian

Legislative Body. Some of the state government regulations narrowing the scope of various laws governing open meetings use the term "legislative body." Would a CID board be defined as a legislative body? -George H.

RESPONSE: Associations have already been recognized by the courts as quasi-governmental entities.

Audits. Do you know if the 120-day rule for annual audits/reviews has been relaxed for associations with December 2019 year ends (due to the COVID-19 crisis)? -Jeremy N.

RESPONSE: Not that I'm aware of. However, if your CPA can't meet the deadline due to the virus, I can't imagine any penalties will be imposed if the financial statement is late.

Disabled. I live in a retirement community of over 6,000 condos. Our pool and hot tub have been closed. We have many elderly and partially disabled in our community who rely on the pool for their only physical (therapeutic) exercise. They need a zero-gravity environment to exercise their joints and spine. Can our pool and hot tub be reopened to accommodate this population? -Roxanne S.

RESPONSE: Most, if not all, associations have closed their pools and spas--some under orders from cities or counties. Even if not under local orders, as a practical matter, pools and spas are problematic. If someone is unknowingly carrying the virus and uses the facilities, it will be passed to others. An association has no legal obligation to grant accommodation to a request that would pose a threat to the health and safety of others.

Extend Payment. We bill homeowners the first semiannual assessment on April 1, which is due May 1. Should we extend the due date a couple of months to help out financially? -HOA Board

RESPONSE: I would send out the assessment on schedule. You need the money to pay bills. If someone is out of work, you can work out a payment schedule with them.

Real Estate Sales. We recently sold our property in a gated community. We have a scheduled closing through an escrow company which we are expecting and hoping to happen early week. Considering the current climate and closing of non-essential business, do you have an idea of our chances to complete this transaction? -Marilyn S.

RESPONSE: The people needed to complete your sale should still be working. They may be working remotely but there is no reason they can't keep the closing on track. 

Helping Neighbors. My neighbor and I want send an email to community members offering help during this time. We are proposing to go to the grocery store, run essential errands and the like. We feel that this is a good time to remind everyone we are in this together and we are all here to help one another as best we can. Before writing our letter, I thought I'd reach out to you to see if there were reasons for not proceeding. -Karen F.

RESPONSE: You are good souls. We need more like you. Full speed ahead.

Basketball. I observed four or five young people playing, bumping into each other, all touching the basketball and themselves. I saw large group of young people sitting side-by-side, eating lunch at a picnic table. -Lissa C.

RESPONSE: Young people think they are invincible. Right now, they desperately need adult supervision.

Virtual Meetings. Do the virtual meeting have to have a video capability or can they be done by conference call where everyone can join in? What are the actual guidelines for this type of meeting, it may be the wave of the future. We held one the other day and actually it was quite nice. Everyone who wanted to join the call did. -Ron R.

RESPONSE: Video is not required. You can do your meetings via conference call. At some point, we will publish some guidelines.

Prayers. Love your newsletter. Prayers for everyone’s safety. -Veronica N.

RESPONSE: Ditto on the prayers.

Texas Pools. I am a board member of a condo complex in Houston, TX. Over the past week, via email, our board emailed back and forth about what do while keeping personal contact at a minimum. We made decisions about closing facilities. I am seeking your thoughts on whether the pool should have also been closed for health/safety reasons. -Lynn R.

RESPONSE: I'm in favor of closing California pools for now for the reasons discussed in an earlier answer. You should consult legal counsel in Texas for guidance related to your pools.

My Photo. I seriously love you!!! Thank you for all that you do for our industry. I think some people would be completely lost without you. Also, love your new sign off photo. Hope that does not become a permanent clothing attire. -Andrew M.

RESPONSE: Many thanks. The mask may become a fashion statement. I could change the color to match my mood.

Humor. Glad to see you put that mask back on!! Keep on posting, we need your steady guidance and humor. -Donna G.

RESPONSE: The mask temporarily came off when the Governor locked down the state. It really gave me pause. The economic damage the virus is doing is as serious or worse than the health impact to individuals. It has put many businesses on life support and others have already died. I hope they quickly get this under control.

Election Inspector. Thank you for your update about the coronavirus. What is the minimum number of inspector we need to have? Before we used to have 2 one of them opened the envelopes, and reading who got how many votes, and the other person wrote down the numbers, and at the they both counted them. Is it still okay to do it that way? -Irene N.

RESPONSE: You must have either one or three inspectors. Keep the two you use but designate one as the inspector and the other as an assistant. Do that and you will be fine.

NOTE OF THANKS. I may be biased, but I think legal counsel to associations around the state provide an essential service to their clients. Thank you to everyone for keeping us employed. If we stay calm and push forward, we will get through this. If you need anything, call us at (800) 464-2817 or send an email.

Boards can contact us for friendly,
professional advice.


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

HOA Operations Are Essential

Mar 21, 2020 0 Views 0 Comments

Associations and their management companies should continue to operate.

Executive Order. A memorandum by the Department of Homeland Security referred to in the Governor's Executive Order allows for workers needed to ensure continuity of building functions, including security.

Essential Business. Various cities in California have included the following in their definition of essential businesses: Plumbers, electricians, exterminators, custodial/janitorial workers, handyman services, funeral home workers and morticians, moving services, HVAC installers, carpenters, landscapers, gardeners, property managers, private security personnel and other service providers who provide services to maintain the safety, sanitation, and essential operation to properties.

Boards of Directors. Homeowner associations need to keep their lights on and the water running. At a minimum, boards of directors should continue to pay bills and hold "virtual" meetings. There are a number of conferencing services available for boards to use. Here are some:

  -Amazon Chime
  -ClickMeeting
  -ezTalks
  -Google Hangouts
  -GoToMeeting 
  -Join.me
  -Skype
  -Zoom


Recreational Facilities. For now, all recreational facilities, such as gyms, pools, spas, tennis courts, and playgrounds, should be closed.


I run a senior living community HOA, we provide meals, care, supplies to residents. We are essential services. Without us at work, we would be abandoning these vulnerable people. We have cut all non-essential staff, like leisure service/activities staff, but kept of or kitchen operation to feed them, janitorial to take out trash, and security to name a few. The governor makes no mention of assisted living or senior communities, but I am sure we are essential, regardless of what he thinks----we will be at work to perform this critical service to the, safely of course. -Chris A.
RESPONSE: Yes, you qualify as essential.

Thank you for your daily updates related to Covid-19. Just letting you know that according to the City of Long Beach, property managers are “essential” workers (in today’s newsletter there was some uncertainty regarding this). It’s addressed in 14.h. of their health order.  -Linda C.

An Order from Los Angeles County, which specifically names property management as essential businesses (13h). -Brian F.

The exceptions to the City Order in Los Angeles includes property managers who are considered essential services. A valet might be considered essential if needed to allow travel of essential personnel. Tennis is not advised since it is an activity that involves multiple people. Solitary exercise is okay. Thanks for the frequent newsletters. -Paul Y.

Our complex of 513 condos and about 25 acres of property has closed our office window. We are transacting business via telephone and/or email. We are a self managed community with a maintenance staff, security and office personnel. -Virgil M.

I am passionate about tennis. I have been advised by a doctor that playing tennis should be avoided. Everyone handles the same ball and even if no symptoms could spread the virus by contact with the ball. I suggest changing your advice that it is “probably safe” -R.T.

In our large Senior HOA, we post notices, minutes, newsletters, etc. on bulletin boards in our laundry rooms, i.e., "Canceled Board Meeting." Only a third or so of our members are on email where we also post. We do post with gloves, masks, etc. but no control on what happens after that. Should we be posting high-touch notices in the highly used laundry rooms? If not, how do we comply with the noticing laws? Thank you. Love your humor too. -Concerned Board Member.

RESPONSE:
You should continue to post notices. Sometimes, it's hard to protect people from themselves. By now, members should know better than to touch surfaces. If you think it helps, post a notice not to touch notices.

As a former HOA board member I consider your newsletters "essential." You impart a lot of needed info in lay language, simply stated, in few words. Keep it up! -Bud A.

What if we outsource accounting to an independent third party and they refuse to cut checks for essential HOA services such as utilities, insurance premiums, etc.? -Tracy D.

RESPONSE: Let them know if they don't start cutting checks, you will find someone who will.

Adrian ... our HOA held a very successful virtual board meeting on Wednesday. Our only hitch was making sure directors and members mute their phones when not speaking. -Norbert K.

OPEN
FOR BUSINESS

Even with most Californians sheltering at home, ADAMS | STIRLING is open for business and fully functional.

Because we invested in technology that allows us to operate during emergencies, we continue to respond to client needs when others cannot.

If you need anything, call us at (800) 464-2817 or send an email.

Boards can contact us for friendly,
professional advice.


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

California Lockdown

Mar 20, 2020 0 Views 0 Comments

Overnight, California went into lockdown. The Governor ordered 40 million Californians to stay home. (See Executive Order.) To get the pandemic under control, only those in essential services are allowed to work.

No Timeline. The dramatic move does not have a timeline. The order is in place until further notice. If everyone complies, the immediate cessation of human contact should stop any new cases of the coronavirus.

Even with a complete lockdown, the number of reported cases will continue to rise as testing identifies people who already have the virus but don't know it.


HOA Management. The order exempts essential services like grocery stores, pharmacies, gas stations and doctor’s offices. I believe management services are essential to association operations but I suspect the Governor does not. Management company CEOs will need to decide who to send home and who is critical to their continued operations.

Condominium Highrises. What about condominium highrises? They will need at least skeleton crews to respond to plumbing emergencies, facilitate package deliveries, etc. Since all residents need to stay home, it's unlikely valet services would be deemed essential.

What Now? If we hope to get back to normal any time soon, we need to stop the spread of the virus. That means temporarily stopping all social contact. You may want to invest in Disney+ and Netflix since, for now, people will be spending a lot of time parked in front of their TVs.


Thank you for your newsletters. It is comforting to read your common sense and positive replies to all of the HOAs in California. We will get thru this together! -John


Does your mask come in different colors? :) Thanks for the continuing no-nonsense guidance with a bit of added humor. -Shirley P.

Love your newsletter. Thank you! -Michael W.

Hahaha…I agree some we should always practice social distancing _ hahahhaa ! Sending love and thanks for all you do… -Elizabeth B.

What??? Threatening lawsuits if they met using electronics ??? I didn’t know whether to laugh or cry when I read that! But thanks always for all your wonderful information! -Elaine J.

Our association is having a Zoom board meeting, but they keep our restaurant open. We also have not limited access to the club house. Most committees are shutting down but clubs continue to meet. Would it be prudent to at least put up a warning sign to avoid potential lawsuits? -Finn M.

RESPONSE: It would be prudent to stop all meetings, except those conducted electronically.

I'm the president of our 12-unit HOA and a freelance writer by trade. I've been tamping out fires for many of my clients and reiterating the same thing: use your social media to keep your customers informed. So HUGE THANK YOU for utilizing your list and continuing to send very relevant information. Many, many thanks. -Christine K.

I, for one, have always practiced safe computing. So you're a little late with the mask! Seriously, though, thank you so much for your newsy newsletter. I am president of our HOA board and trying to keep up with everything can be quite daunting. I know that whatever you are writing, I can trust and use it for our own explanations. -Nadine S.

“I can think of a few people who should continue to practice social distancing.” BAAAHAAA! Love it. Love the newsletter. Constantly cutting and pasting tidbits for my boards and other managers. -Sam N.

Thank you for providing such great information. -Jennifer C.

How about an article on how to hold HEARINGS by teleconference. Yes I know we should postpone them but then you know how some clients can react to that suggestion. -Michael H.

Great stuff, as always. However, I found an error at the end of paragraph five--I’m sure you can think of more than a FEW who should continue to practice social distancing… Thanks for keeping us updated. -Scott C.

I love that response. I can't believe some are dumb enough to threaten a lawsuit. Too much! -Alexander P.

Your messages are highly appreciated! As former president of an association and now an active owner and volunteer, I see the great value in your advice and suggestions. -Kerry G.

As the longtime president of a 14-unit townhouse HOA, I really appreciate your newsletter. It’s not only super informative, but also funny and easy to read. So thank you! Regarding annual elections and the new voting requirements: is it necessary to have an outside person count the votes if the election is uncontested? We are planning on distributing the ballots ahead and opening them at the start of the meeting which we are going to conduct via Zoom. With only 14 units and 5 positions on the board, contested elections are never an issue. Thank you. PS, love the face mask. -Janet G.

RESPONSE: I am an advocate of elections by acclamation. I don't like wasting people's time and money on meaningless elections when the outcome is already known. Even though others disagree, if elections by acclamation are authorized in your bylaws, I believe they can be done.

Thank you for your newsworthy emails. I enjoy them thoroughly. Question, what is your opinion since I have not seen it mentioned as to charging late fees or interest during these trying times? -Randy S.

RESPONSE: I believe late fees and interest on delinquent accounts should be suspended for now.

Any advice about closing down tennis/pickleball courts? If the tennis committee decides it’s a good idea? Can the president authorize it or does there have to be a meeting? Can the Board vote by email? -Kate L.

RESPONSE: It's the board's decision about facility closures. Swimming and tennis could probably be done safely but...

I’ll bet when you started the A/S Newsletter you never imagined you would get so much love from your readers. It’s a reflection on your genuinely good nature and compassion. Razor sharp analysis, with the ability to solve problems with an eye to not creating new problems in the process. And your humor takes the edge off of some painful subjects. If you were President of the United States, Governor of California, or Mayor of San Francisco, I’d feel better knowing a wise and thoughtful adult was running the show. Best wishes to all of your staff–stay well! And continue working to slay those dragons. -Tony V.

RESPONSE: Many thanks for the compliments. However, if nominated, I will not run. If elected, I will run...in the other direction.


Closing Comments. Everyone stay home and stay safe. The crisis will soon pass but we need to do our part to make it happen.

Adrian J. Adams, Esq.

Boards can contact us for friendly,
professional advice.


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

More COVID-19 Questions

Mar 18, 2020 0 Views 0 Comments

Delinquent Assessments. Now that we are crisis mode, how do we handle owners who are losing their jobs/income? Don't really want to see people losing their homes due to this crisis. What if the HOA can't pay its bills? What are your thoughts on how to best handle this situation? -Sandy A.

RESPONSE: The crisis will end at some point (hopefully soon) and businesses will restart. I recommend boards place a lien on delinquent properties to protect the association’s interests, but suspend all foreclosure activity. Once people return to work, you can work out payment plans with delinquent owners.

Permanent Job Loss. The more difficult scenario will be those persons who permanently lose their jobs. They will be looking for new jobs once the economy reengages. How long do you wait for them to find work? What if they can't? When you get to that point, you will need to discuss options with legal counsel and decide how best to proceed.

Drop in HOA Revenue. If delinquencies impact cashflow, associations still need to pay their bills. If boards need to, they can borrow from reserves. Without a vote of the membership, boards are allowed to borrow from reserves to meet short-term cashflow problems. (Civ. Code §5515(a).) Monies borrowed from the reserves must be repaid to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the association, temporarily delay the repayment. (Civ. Code §5515(d).) 


Postpone Annual Meeting? Our HOA is in the midst of an election. Our annual meeting is at the end of March (31st). The election results are to be tallied then and new board members announced. Our recent board meeting was canceled because of the COVID-19 Virus. What do you recommend we do in order to complete the election? -Cleona W.

RESPONSE: Two days ago, Federal health officials limited the size of all gatherings to 10 people. Yesterday, Orange County's Health Officer prohibited all public and private gatherings of any number of people, including at places of work. These orders highlight the importance of avoiding public gatherings.To protect your membership from the spread of the coronavirus, you have two options.


Option 1. Suspend the Annual Meeting. Suspend your annual meeting until the coronavirus crisis passes. At that point, reschedule the meeting, have the inspector of elections bring in the ballots, open them in front of the membership and tabulate the results. At that point, new directors are seated. Until then, existing directors remain in place. 

Option 2. Suspend Attendance but Count the Ballots. Your second option is to suspend membership attendance at the annual meeting but have the inspector open ballots and tabulate results. To protect the inspector, the counting could be done at the inspector's office. That way, the inspector avoids traveling to and working in an area that may already be contaminated. The downside is that members cannot observe the counting of ballots. Even thous this is contrary to the requirements of the Davis-Stirling Act (Civ. Code §5120(a)), I believe it is acceptable under the circumstances.

The option you choose is a business decision for the board to make in consultation with legal counsel. Once a decision is made, make sure you communicate it to the membership.

Rules Enforcement. Should we suspend parking rules? College kids are coming home, so there are lots of extra cars in the community. -Bob W.

RESPONSE: Earlier this week, Los Angeles indefinitely suspended parking tickets for street-sweeping violations. It would make sense for boards to suspend enforcement of rules that are somehow impacted by the coronavirus. Parking seems to be one of those rules. Boards need to be smart about how they handle this unprecedented crisis. They should not be heavy-handed and make the situation worse.

Kudos #1. Great effort Adrian during unprecedented times. Thank you. -Mike P.
 

Kudos #2. Just a quick note to you (and your team) to express my sincere thanks for all you are doing, through your newsletter updates, to keep our industry on the leading edge of this scary situation. Your comments, advice and humor are very helpful and informative. -DS
 


Teleconference Meeting. One of our associations has no onsite office and is a good distance from our management office. Every meeting place in town is closed down due to coronavirus. We have time-sensitive business to conduct but it is not executive session material, so we need an open meeting. Without a physical location to meet, could we hold an open meeting via teleconference or web ONLY? -Kevin K.

RESPONSE: Yes, you can hold it via teleconference or web only--even if members object.

Online Platforms. Adrian, many of the online meeting platforms (zoom, skype, go to meeting etc.) have free versions that can easily handle a small board meeting, even allowing members to watch or listen, and contribute verbally or in a chat feature. This is FAR superior to a conference call. Some special rules may be needed as far as recognition, voting procedure etc. -James S.

Swimming Pool. If an association has a pool for the HOA community, what is your advice as to whether it should remain open? -Larry H.

RESPONSE: Close it.

Closed Gym. Thanks 4 all your hard work. Seems insane to close those things that keep us healthy? {i.e. our gym} People have been incredibly diligent in following protocol--the machines have never been cleaner. Many of our health depends on using this gym daily. I understand what is going on around us. Felt this needed to be said. -Bonnie J.

RESPONSE: Right now, stopping the spread of the virus is paramount. Let's hope it soon passes.

Gym/Spa/Pool. We are in the City of Los Angeles. The HOA maintains a gym and pool and spa. The pool is currently not heated and nobody uses it. However the spa is heated. Should the spa be turned off and the gym closed to the community? -Barry G.

RESPONSE: Yes. Some knucklehead will use the gym, catch the virus and sue the association. It seems unlikely they could win, but you would still have to defend the suit and it's unpredictable what juries will do.

Boards can contact us for friendly,
professional advice.

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

COVID-19 Virus Feedback

Mar 17, 2020 0 Views 0 Comments
Since everyone in the state is now quarantined, you clearly have more time to send emails. I received far more than I can include in the newsletter. Following is a small sampling. -Adrian


Open Meeting Act. I applaud your decision to ignore a small section of Civil Code regarding having to have one person present in a room for owners to attend. Last week we notified our clients that teleconferencing is the only method we will use for the duration of the current health issue. Keep up the good work. -Michael H.

Webinar Meetings. A possible solution regarding board meetings--we are considering a webinar where members can call in and use computer to log in and view our PowerPoint presentation on agenda items while they listen to the meeting. We'd have open forum at the end. At work we use webinar for other agencies and state meetings. Even JoinMe is an option. -Joseph L.

Free Conference Call. We will be holding our board meeting via FreeConferenceCall.com so board members, our manager, and our association members can call in from their homes. Just thought you might want to know about this option. -Jan K.

Florida HOA. As always, thank-you for your sound advice and guidance. What do you know about Florida HOA law? Do you have a presence there as well? -Susan M.

RESPONSE: We don't have an office in Florida. Your best bet is to contact your local chapter of the Community Associations Institute. They can provide you with a list of law firms that specialize in HOA law. There are eight chapters in Florida. Following is a list with links providing contact information:


  Central Florida Chapter? (Orlando and vicinity)
  Gold Coast Chapter? (Palm Beach, Boca Raton, and vicinity)
  Northeast Florida Chapter? (Jacksonville and vicinity)
  North Gulf Coast Chapter? (Pensacola and N. Gulf Coast)
  Southeast Florida Chapter (Broward County and vicinity)
  South Gulf Coast Chapter? (Ft. Myers, Naples, and vicinity)
  Suncoast Chapter (St. Petersburg and vicinity)
  West Florida Chapter (Sarasota and vicinity)


Managers at Risk? Is the managing agent supposed to put themselves at risk by being at the meeting location? -Carolina R.

RESPONSE: No.


Holding Board Meetings. With the coronavirus scare going on, we held an open meeting via teleconference: (1) We advertised the meeting 4 days in advance. (2) We sent out the teleconference number so all members could attend from home. (3) We allowed an "Open Forum" for owners to speak and be heard by everyone. (4) One Board member went to the normal meeting place and was the "Leader" of the call via a speaker/spider phone. (5) Minutes of the meeting were created. All went well. (We have 261 units.) -Ray O.

Live Stream Meetings. Our board is going to hold their meeting this coming week, but is planning to live stream to members who can watch at home; there will be no member attendance allowed.....at least that is the current plan. -Melinda A.

Facebook Meetings. You might consider telling people to hold meetings via Facebook. They can do them live on a cell phone camera and it can be two way for questions from the homeowners. The Facebook page can be private to HOA members only. Just offering a suggestion. -Wendy W.

Suspected Covid-19. What do we do if we suspect Covid-19 may be present in the HOA? -PJS

RESPONSE: Be careful not to accuse people of having the virus--we are also in the middle of our annual flu and cold season. You don't want to find yourself on the wrong end of a defamation lawsuit. Stay calm and maintain social distancing. This will soon blow over.


KEEP MEMBERS INFORMED. One of our boards sent a letter to their members updating them on their actions related to the coronavirus. The letter is a model of how communications should be handled. I recommend all boards consult legal counsel regarding coronavirus updates with their members. Following is a copy of the letter:

To All Residents,

This correspondence is to let you know that the Board of Directors met in an Emergency Executive Session on Saturday, March 14, 2020 at 5:00 p.m. to discuss the ongoing COVID-19 health crisis. After consulting with legal counsel, we feel that it is necessary to provide you with the information below.

The health and safety of our staff and residents is our highest priority and we have asked management and staff to implement certain changes in an effort to contain and mitigate the possible transmission of the virus within our premises. While we know that you have received several communications regarding preventative measures, we thought it would be helpful to provide you with some additional information and reminders.

1. No cases of COVID-19 have been reported by any resident or staff member of the Mirabella. Residents and staff will be promptly informed if this changes.

2. Social Distancing measures are being implemented and everyone should try to maintain a distance of 6 feet from one other.

3. We have increased the frequency of cleaning in all common areas including door handles, surfaces and elevator buttons. Hand sanitizer stations have been ordered and will be placed in strategic areas when they arrive.

4. We are suggesting that everyone use caution when touching public surfaces and to engage in frequent hand washing.

5. The valet attendants are using rubber gloves when accessing vehicles and we urge residents to use disinfectant wipes in situations where other individuals may have access to your automobile and keys.

6. Residents are encouraged to self-park their vehicles if they are confident they can do so safely.

7. If you have determined that you need to self-quarantine whether you have the virus or not, it is imperative that you inform management so staff can do what they can to facilitate your self-quarantine. However, we cannot put staff at risk by bringing items into your home.

8. The fitness center, saunas, swimming pool, spa, pool area and conference room have been closed. Management will contact you to reschedule your events as soon as the facility is re-opened.

9. Delivery personnel will no longer be permitted on residential floors. All food deliveries are to be left at the front desk. Residents are encouraged to use delivery APPs that include payment and tipping within the APP or to come to the front desk to finalize their order.

Thank you in advance for your patience and cooperation. While we understand the seriousness of this situation, we are encouraged that by implementing these measures and following the CDC guidelines that we can minimize the effects of this virus on our community.

Board of Directors

Kudos #1. I have read many emails from many senior executives this week about the evil virus. Your message is perfecto --- short, sweet, simple, and to the point! -Masud O.

Kudos #2. I cannot believe what we are seeing and appreciate your emails more than you will ever know. -Bill B.

Kudos #3. Like many other people affiliated with HOAs, we are extremely glad to have the resources of the Adams Stirling website. Our board routinely accesses it for valuable information. Additionally, we are very pleased with the newsletter and the information it contains. -Ron C.

Kudos #4. Good morning, your newsletter is great and filled with a wealth of information. -Leonila K.


Kudos #5. Great update…at least now with all the panic buying we will know that food stuffs, canned goods and frozen products will all be “turned over” restocked items fresh in the stores. Again—thank you for your timely and informative newsletter. -Donna G.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Coronavirus - Board Meetings

Mar 15, 2020 0 Views 0 Comments

It's remarkable how quickly events are moving related to the coronavirus.

Panic Buying. This morning, I drove to the supermarket to pick up a few cleaning supplies for the office. I walked into Vons and was stunned to see a huge line of people with grocery carts filled to overflowing waiting to check out. The line snaked throughout the store. I did a quick walk-through and shelves everywhere were empty. People are panic buying. It was unsettling.

Social Distancing. The news media has wall-to-wall coverage about the virus and everyone is being encouraged to stay home. Events everywhere are being canceled. This morning, I sent an email to everyone in our firm encouraging them to cancel face-to-face meetings. For now, all communications with clients will be done via email and phone calls.

Board Meetings. Yesterday, I published a newsletter that association board meetings should be done in compliance with the requirements of the Davis-Stirling Act. One of the options was to encourage members to gather in a room and listen to the board conduct its business via a speaker phone. Given the rapidly changing circumstances, I am revising my advice.

Meeting Protocol. Boards should not encourage members to gather together. It pains me to say that, for now, boards may need to hold meetings via email and conference calls without member observation. Meeting minutes still need to be taken and published.


The situation is temporary and should not be abused. Where possible, boards should utilize conference call services where members can attend meetings by calling into a conference number without leaving their units.

Let's hope the virus quickly burns itself out.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Coronavirus Impacts Associations

Mar 15, 2020 0 Views 0 Comments

Due to the growing impact of the coronavirus on all industries, I decided to publish a newsletter today rather than wait until Sunday. With rising concerns about what is now a pandemic, boards of directors are uncertain what actions, if any, they should take.

Following are questions we received about the coronavirus and general guidelines I believe are prudent. While boards are obligated to make good faith decisions in the best interests of the membership, we are in uncharted territory when it comes to the coronavirus. -Adrian

#1. Conducting Board Meetings. Would associations be justified in holding their board meetings via conference calls as “emergency meetings” due to the declared pandemic, and then ratifying those actions after the health issues are over? -Russ H.

RESPONSE: Probably not.

Older board members with underlying medical conditions are justifiably concerned about possible exposure to the coronavirus. There are steps they can take to minimize their risk and still fulfill their duties as directors.


Conference Phone. Concerned directors can attend meetings electronically via telephone, provided they can hear all other directors in the meeting and all other directors can hear them. This is easily accomplished with a conference phone. Attendance in this manner counts as if the director were physically present in the meeting. (Corp. Code §7211(a)(6).)

The Entire Board. If ALL directors wish to attend a board meeting by telephone, they can do so. However, notice of open meetings must identify at least one physical location with a conference phone where homeowners can attend the meeting and listen to the board conduct business. (Civ. Code §4090(b).) The statute does not require any of the directors be physically present at the meeting location--only a representative of the board (such as the manager).

Emergency Meeting? What if the management company has suspended all meeting attendance for their managers due to the coronavirus? If no other representative can be found to set up the conference phone, can the meeting still be held as an emergency meeting. Unfortunately, this does not meet the definition of an emergency. An emergency is defined as "circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice" to the membership. (Civ. Code §4923; Civ Code §4930(d)(1).)

Fortunately, technology has reached the point where a call-in number can be published along with the agenda so members who wish to attend can also call into the meeting. All attendees except the board should mute their phones and only listen to the meeting. Except for open forum, members cannot participate in the board's meeting. For associations where there may be a large number of attendees, boards should consult with a technology expert to determine which call-in service best serves their needs.  

#2. Close Pool/Spa Facilities? Would you advise boards close their pool/spa facilities for the duration? -Russ H.

RESPONSE: Yesterday, Governor Newsom limited all public gatherings in the state to no more that 250 people. Los Angeles announced it was limiting gatherings to no more than 50 people.
Disneyland and all other theme parks in California announced they were suspending operations to help limit the spread of the coronavirus. If boards want to temporarily close their pool/spa facilities, they can certainly do so. If directors are uncertain what to do, they can consult health care professionals for recommendations, as well as consulting legal counsel.

#3. A Quarantined Resident. How should boards respond if they learn that a resident tested positive for the coronavirus? Do they have an obligation to inform residents? Is there liability for the board if it does not? -Anonymous

RESPONSE: This raises conflicting interests--a person's privacy about their medical condition and the membership's safety.

Authorized Disclosure. If the person with the coronavirus authorizes full disclosure, the board can disclose the person's name to the membership. This allows residents who had contact with the person to immediately self-quarantine and get tested for the virus.

Before doing so, I encourage two precautionary steps for boards. First, the authorization should be in a written communication from the person or the person's attorney. It should never be based on hearsay and rumors.

Second, the disclosure should be limited to members and residents. Particular vendors who may have had contact with the person could also be alerted. The board should not broadcast the information outside of the community.


No Authorization. If the infected person tells the board in confidence that he contracted the coronavirus and does not want anyone to know, the board may still have a duty to notify the membership. However, ti would do so without disclosing the person's name. The board would simply report, “A resident has reported testing positive for the coronavirus.”

A disclosure, however limited, alerts residents to take extra precautions to protect themselves.
In addition to giving notice, the board should contact the Centers for Disease Control. The CDC has the power to make additional disclosures, trace contacts, quarantine individuals, and take other actions it deems medically necessary.

Self-Quarantine. What if the person does not have the coronavirus—he is simply self-quarantining as a precaution? If that is all he is doing, I don't believe the board has an obligation to notify the membership.

Potential Liability. There is always the potential for liability if a board becomes aware of a threat to their community and does nothing. If, as a result of the failure to disclose, members fall ill and some die from the illness, lawsuits will likely follow. Accordingly, silence may not be the best course of action.


Recommendation: As volunteers, boards are allowed to seek expert advice. When confronted with issues involving the coronavirus, directors should not make decisions based solely on recommendations in a newsletter--whether mine or someone else's. They should contact legal counsel and the CDC for guidance.

#4. Law Firm Disaster Plan. Two years ago, our firm established a disaster continuity plan. With our existing onsite computer servers, we were vulnerable to a complete shutdown of the firm's operations in the event of a natural disaster.

To address the problem, we "virtualized" our operations, i.e., we moved all operations into the cloud. Instead of onsite servers, we moved everything to servers housed in hardened facilities with multiple redundancies for power, cooling, and backup systems in areas of the U.S. with little or no vulnerability to natural disasters.

Seamless Operation. Since our document management system, accounting programs, office productivity suite, time tracking software, internal communications and phones are now in the cloud, our entire law firm--all attorneys, paralegals, staff members and executive team--can work remotely from any device. If some or most were quarantined at home (or on a cruise ship), we can continue to operate without missing a beat.

Zombie Apocalypse. When we did our disaster planning, we thought it would be an earthquake or fire. We never imagined it would be a zombie apocalypse. Boards should take stalk of their own planning for a natural disaster. At some point, their association may have to wrestle with the aftermath of a major earthquake or fire.

TONYA TODD
JOINS ADAMS|STIRLING

I am pleased to announce Tonya Todd joined our team of attorneys.

Former JAG Officer. As a Captain in the Army and a JAG officer, Tonya led the prosecution of felony crimes including sexual assaults, larceny, aggravated assaults, child abuse, fraud, conspiracy, and homicides.

Magistrate Judge. Tonya also served as a Magistrate Judge and presided over pretrial confinements, reviewed evidence, made findings, issued warrants and ruled on law enforcement applications for search and seizure authorizations. In addition, Tonya authored over 150 legal opinions on matters such as sexual harassment, discrimination, ethics, and environmental law.

Education. Tonya received her Bachelor of Arts in Sociology from Sacramento State University in Sacramento, California. She then went on to earn a Juris Doctorate from the Hastings College of Law in San Francisco, California.

We are delighted to have Tonya join our team. If your association needs legal services, contact us for a proposal.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Coronavirus Protocols

Mar 8, 2020 0 Views 0 Comments

Two weeks ago, I attended a board meeting where the president was absent because he was in quarantine with the coronavirus. That got my attention.

On March 5, California declared a public health emergency, as have many cities and counties around the state. Airlines, colleges, churches, the entertainment industry, and many other organizations are adopting protocols to protect their employees, customers, and clients from the coronavirus.

Precautions related to the virus are making their way into our industry as well. One of the management companies I work with is located in Seattle, Washington. Last week, the CEO implemented company policies and notified the associations they managed. Following is an edited version of his message:

Dear Board Members,

****** is taking the coronavirus seriously and we ramped up our efforts since the first cases were reported in the Seattle area. We want to inform you of the steps we are taking to protect our team and minimize any service disruptions.

We enhanced office cleaning, expanded our work-from-home policies and created tight restrictions on staff members who travel, have known contact with anyone infected, or show signs of illness. For those of you with onsite staff, we are advising our teams of best practices regarding personal protection and encouraging enhanced cleaning and maintenance of common areas.

We temporarily suspended staff meetings and board and manager education programs and encourage you to do the same by critically considering the benefits of cancelling or postponing board meetings, annual meetings, and community events. We are encouraging our community managers to work with you closely to aid in remote decisionmaking via video conference, conference calls and, when appropriate, unanimous decisionmaking via email. As a company, we will support our individual manager’s decision to attend meetings via video conference or conference call.

We urge you to familiarize yourself with the recommendations of experts, take necessary precautions to protect your community, and set community-specific guidelines.

It is likely the precautions we are taking and the potential of increased use of sick leave by staff members may impact turn-around times for certain services. We ask for your support and understanding. As a company, we are doing everything we can to proactively deal with this situation while also minimizing disruptions as we continue to provide services to each of you. 

Recommendation. Because of the precautions already being taken by the United States, it is possible the coronavirus will have only a mild impact on us individually and our businesses. Still, it doesn't hurt for homeowner associations, management companies, law firms and other industry vendors to implement common sense precautions such as those described above. Not only will they protect everyone from unnecessary exposure to the coronavirus, it protects us against all other viruses as well.

Kudos #1. I’m a big fan of the newsletter–it’s the one industry communication that I read, in full, every time. Thank you for that. -Jason M.

Kudos #2. I believe Davis-Stirling is the best website ever. -Elsa W.

Kudos #3. I love your newsletter and look forward to each publication. THANKS! -Barbara S.

Kudos #4. Love your newsletters. -Roger K.

Kudos #5. Thank you for all your help in educating the population. -Scott C.

Kudos #6. Great articles. -Bonnie A.


Term Limits. Our HOA allows directors to serve two terms and then requires them to step down for 11 months. This has worked fine for decades. Does SB 323 start the clock over again on term limits for those board members whose two terms expire this year?
-Toby S.

RESPONSE: No, the dumpster fire known as SB 323 does not reset terms. Instead, it knocked out term limits. That means there is no limit on how many times directors can be reelected to their boards.

I don't think that was their intention but the legislation backed by Marjorie Murray's Center for California Homeowner Association Law (CCHAL) was so badly drafted that term limits was one of the many casualties of the bill.

CAI's California Legislative Action Committee (CAI-CLAC), is working to correct this glaring defect so associations can once again impose term limits. Because this is pending, I recommend boards not amend their bylaws to remove term limits. You should leave it in place while CLAC works on clean-up legislation.

Email Addresses. What is the status on members requesting and receiving member email addresses? Are members entitled upon request to receive all opt-in email addresses? -George B.

RESPONSE: Yes, if a member opted into receiving notices from the association via email but has not opted out of sharing their email address with fellow members, it becomes part of the association's membership list and all members have a right to receive and use it. Most members will not be happy to have their email addresses floating around the community. To preserve member privacy, boards should notify all members they can protect their email addresses by opting-out of sharing it with the membership.


Contacting Marjorie. Do you know of any way to get hold of Marjorie, or her entity? Their website is down and I really want to ask about uncontested elections. I promise not to yell about it, I just think the intent of the provision is lost in the execution (it had to be, as this is just nuts and is costing us way too much!). -Calli P.

RESPONSE: There has been a lot of speculation about why CCHAL's website is no longer operational. To contact Marjorie Murray, try:

    Marjorie Murray
    Center for California Homeowner Association Law
    3758 Grand Avenue, Suite 56
    Oakland, CA 94610
    [email protected]
    (855) 648-4043

Full Disclosure. While you are at it, you might ask Ms. Murray for a list of her members' names and email addresses, the same requirement her organization imposed on nine million members of homeowner associations. Also ask her for a list of the financial backers of her organization. I've been told CCHAL partnered with lawyers who make a practice of suing associations. If so, Ms. Murray should disclose it.

Election by Acclamation. Thanks for adding your “finished thought” to last week’s response to my email. Acclamation is in our governing documents and it makes no sense not to allow it. The law should always make sense (my hope). -Barb D.

RESPONSE: We should pass a law that all laws must make sense and not harm citizens. I can think of a few people who should not be allowed to draft legislation.

Uncontested Election. Our bylaws state: "5.7 Uncontested Elections.  When, at the close of nominations, the number of qualified candidates nominated does not exceed the number of vacancies, the candidates may be declared elected without need for balloting and shall take their seats on the date set for the membership meeting." The word "acclamation" is not contained in the text. Do our bylaws, as written, meet the criteria for an election by acclamation? -Sandy F.

RESPONSE: Yes, your bylaws allow for elections by acclamation. I believe associations can conduct such elections despite SB 323, provided their bylaws allow it. But, I'm just one person. You might send an email to Marjorie Murray and ask what she thinks: [email protected].

Investors on Boards. We recently sent an inquiry to an attorney about investors serving on boards. The bylaws require that directors must reside in the development. The attorney answered that SB 323 did not specify that this was not okay. Therefore, it was fine. Am I reading correctly that you disagree and that any bylaw provision which specifies that directors must live onsite is no longer valid? -Jason M.

RESPONSE: Sometimes attorneys disagree. This is one of those times. To me, SB 323 is clear--there is one mandatory and four permissive director qualifications. You can qualify a candidate for election with these five points only:

  1. Must be an owner.
  2. Not delinquent in their assessments (with lots of exceptions).
  3. Not joint owners.
  4. Not an owner less than one year.
  5. No criminal conviction that voids fidelity insurance.

Requiring a director to live in the community is nowhere in the five qualifications listed above. Therefore, it cannot be imposed. For more information, see Candidate Qualifications.


ELECTION RULES. Election RulesAll associations must adopt new election rules to comply with SB 323. Failure to do so could subject elections to legal challenge and may result in new elections, monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules.

ELEVATED STRUCTURE
INSPECTIONS


Stock Co-ops. Does the Balcony Bill (Senate Bill 326) apply to co-ops in addition to condominiums? -Colleen M.

RESPONSE: If your co-op has three or more units constructed as a multi-family dwelling, it applies. (Civ. Code §5551(l).)

End of Times. Thank you very much for the inclusion of the “Balcony Bill” in your newsletter. Also appreciate the shout-out to Robert Nordlund and the list of RS companies. He and Mike McDermont, the current APRA President, have been great about getting all the other providers on the same page and proactively setting policies and procedures.

We are confident that our reserve study industry is prepared to have a fairly high level of uniformity with the interpretation of what is and is not included, the timelines for such, and the procedures for including the inspections themselves in the reports.

They, you, and a whole bunch of other great lawyers, deserve the thanks and gratitude of Reserve Specialists. I’m optimistic that the explosion of anger and confusion will be delayed a couple years until these inspections, and their findings implications actually start taking place. Then, of course, it will be the end of times. -Scott Clements, Reserve Studies Inc.

Licensed Contractor. I am in the SoCal area. Where can I find a licensed and qualified contractor to do this work? -Jim M.

RESPONSE: Both management and reserve companies are already lining up inspectors and contractors for the work that needs to be done with elevated structures. You should ask them for recommendations.

MISCELLANEOUS
QUESTIONS


Accessory Dwelling Units. Does this mean that every community must allow people to live in garages? -Nancy B.

RESPONSE: Yes. If the house is a not a condominium and has a garage, owners can convert their garages into apartments. I'm not a fan of Governor Newsom's solution to the housing crisis. Destroying existing communities is not the best way to create new housing.

Emotional Needs Dogs
. We are a timeshare HOA and have owners who show up with "emotional needs" dogs. Most appear bogus as you can imagine, which ruins it for legit dogs. But in reading what you sent us, we can now ask them to provide a note from a physician to continue bringing their dogs with them? Also, if someone shows up to rent a unit with an emotional needs dog, we can refuse unless they provide a letter from a physician? I just want to be clear on how I am interpreting the info in the newsletter! -Debra C.

RESPONSE: People falsely claiming emotional needs dogs is the most abused area of the law I can think of. When the medical condition of the person claiming an assistance animal is not readily apparent, an association can require a letter from a medical provider that the dog is necessary for the person's health. Once the letter has been produced, the association must grant the requested accommodation. Unfortunately, too many doctors will write such notes even though no medical condition actually exists.

Recommendation. You should talk to your association's legal counsel about creating a written policy for you to follow when people show up with squirrels, peacocks, goats, miniature horses, pigs, goats, and the occasional dog, claiming they are assistance animals that must be allowed into common areas, club houses, gyms, pools, etc.

Dog DNA. I am the president of our 1,290-home gated community. We try to maintain our community as a safe and enjoyable place to live. Many residents have dogs and walk them every day but do not pick up after their pets. Is there anything that would prevent us from having a DNA test done on dog droppings and fining owners? -Ruth G

RESPONSE: There is nothing more disgusting that stepping into a dog's feces. Yes, you can test a scofflaw's dog droppings. (See DNA Testing.)


Mailbox Break-In. To what degree is the association liable when thieves break into both incoming & outgoing mail boxes on the property? -Elliot S.

RESPONSE: Except under rare circumstances, associations are not liable for the criminal acts of others. (See Criminal Activity and Liability for Security.)


Internal Dispute Resolution. Are there any new rules on IDRs? -Roger K.

RESPONSE: Not that I'm aware of. For information about IDRs, see Internal Dispute Resolution.

Association records
. What documents should be transferred when an association terminates a management contract? We changed management companies and when we receive an inquiry regarding accounting or correspondence information, no documentation can be located. -Barbara S.

RESPONSE: When you change management companies, all association records should be transferred to the new management company or to the association. This includes both paper records and electronic. Unfortunately, that does not always happen. Part of the problem is the sheer volume of records management companies handle. From each association the company manages, they receive:

CC&Rs, bylaws, amendments, articles of incorporation, condominium plans, rules & regs, architectural guidelines, collection rules, election rules, minutes (board open and executive session plus annual and special meetings), deeds, budgets, financial records (general ledgers, journals, accounts payable, accounts receivable, canceled checks, vendor invoices, deposit slips, etc.), contracts, insurance policies, general correspondence, newsletters, emailed instructions and correspondence, hearing notices, litigation related materials, and more.

The number of records can be staggering. Not all management companies have the same systems in place to handle the volume.

Storage Costs. Paper is expensive to archive and it's difficult to find a particular document without investing significant time looking for it. Sometimes they are warehoused and then forgotten. Ideally, all records are digitized and stored in a searchable format on a hard drive. For that to happen, the management company must invest in the technology for digitizing records and the manpower needed to scan, name, and store records. Our law firm went paperless years ago, but many management companies have yet to make the investment.

Shortsighted Boards. It means boards should be willing to pay a little more for a management company that is paperless. If a board is solely concerned with the lowest possible cost for management, it is being shortsighted and is foregoing a lot of services--one of them being the conversion of paper to electronic records.

Recommendation: Ask how your management company how they are storing your records.

Roof Antenna. When we had a new roof installed two years ago, the owners agreed to not reinstall the antenna (vintage 1974) as no one used it. Now an owner wants to have a new antenna installed. Is the HOA required to do that and to pay for the installation? -Ursula F.

RESPONSE: No, you are not required to install an antenna. You can, however, allow the requesting owner to install it. Since it only benefits him/her, it would be at that owner's sole expense. You want to be careful that it not be installed in a manner that would void your roof warranty. You should consider recording a covenant making the installing owner responsible for maintaining the antenna and any damage it may cause.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

New Assistance Animal Guidelines

Feb 23, 2020 0 Views 0 Comments

On January 28, 2020, the U.S. Department of Housing and Urban Development (HUD) issued new guidelines addressing assistance animals that individuals with disabilities may request as reasonable accommodations. They replace HUD’s 2013 guidance on service and assistance animals.

Assistance Animals Defined. Under the Federal Fair Housing Act (FHA), assistance animals are trained service animals or untrained animals that perform tasks and/or provide emotional support (“support animals”). Assistance animals are not considered pets and must be allowed if the individual needs the animal due to their disability.

The number of requests to HOAs for support animals has significantly increased. One of the most common fair housing complaints that HUD receives is denial of an assistance animal. According to HUD, the new guidelines were provided “to help housing providers distinguish between a person with a nonobvious disability who has a legitimate need for an assistance animal and a person without a disability who simply wants to have a pet or avoid the costs and limitations imposed by housing providers’ pet policies, such as pet fees or deposits.”

Internet Certification. Often, individuals requesting to keep a support animal have obtained a certificate off the internet. According to the new guidelines, these internet certificates are not “sufficiently reliable” to establish that an individual has a non-observable disability or disability-related need for an assistance animal. Rather, individuals need a note from their health care professional (who has personal knowledge of the person) that confirms the disability and/or need for the support animal.

Unique Animals. Requests to keep unique assistance animals have also increased and are addressed in the new guidelines. Unique animals are those that are not traditionally kept as a pet. Traditional pets are dogs, cats, small birds, rabbits, hamsters, gerbils, other rodents, fish, turtles or small domesticated animals. An individual requesting a unique animal has a “substantial burden” of demonstrating a disability-related therapeutic need for the specific animal or the specific type of animal. Documentation from the individual’s health care professional confirming the need for the unique animal is likely required.

Best Practices. The new HUD guidelines provide best practices for documentation that can be requested to support a request to keep a support animal when the requesting person’s disability and/or need for the animal is not obvious.
They should be read together with other HUD documents, including the Joint Statement with the Department of Justice on Reasonable Accommodation.

Our firm can assist associations in preparing guidelines and protocols for handling requests for reasonable accommodations.

Thank you to partner Laurie Poole for this article.

ELEVATED STRUCTURE
RESERVE TASK FORCE


Because Senate Bill 326 (the "Balcony Bill") implicates reserves, Robert Nordlund, CEO of Association Reserves, Inc., coordinated meetings of reserve study companies throughout California to discuss how best to address issues raised by the bill.

One of the goals of the Task Force was to create some consistency in the application of new Civil Code §5551. Members of the Task Force are:

Advanced Reserve Solutions (ARS)
Association Reserves, Inc.
Barrera & Company
Browning Reserve Group
Complex Solutions, LTD
Foresight Financial Services
The Helsing Group, Inc.
Murray Joseph Reserve Studies
Reserve Data Analysis, Inc. (RDA)
Reserve Studies, Inc. (RSI)
SCT Reserve Consultants, Inc.
Strategic Reserves

Mr. Nordlund generated a written report which is linked to below. Following is a summary of key points from the report.

Affected Associations. Associations affected by the law are condominium developments of three or more units with balcony/deck/stair surfaces designed for human occupancy more than six feet above the ground, supported by beams, joists, columns or posts, that extend beyond the exterior walls of the building, and made of wood or wood-based products.

Deadline for Inspections. The law went into effect January 1, 2020. Associations must have their first inspection completed before January 1, 2025. The sooner inspections occur the better, since it will allow boards to begin reserving for any repairs that may be needed.

Additional Reserves Needed. Monies will need to be set aside for inspection costs. In addition, either special assessments and/or higher reserve contributions will be needed following the inspection, depending what is revealed by the inspection. Starting inspections and reserve contributions now will help reduce any significant expenses required by the bill beginning January 1, 2025. 

Inspection Costs. Achieving the 95% confidence level required by the bill will be expensive. Early estimates are that most associations should expect costs in the range of $5,000 to $20,000. The cost will depend on the number of elevated structures inspected to achieve the high confidence level required by the bill. Getting those estimates now will help boards budget for the expense.

Inspection Cost Included in Reserves. Because inspection are directly related to reserves needed to repair elevated structures and because the definition of "replacement cost" includes related expenses, inspection costs can be included in an association's reserve budget.

Full Report. For photographs of different elevated structures and whether they fall under the statute, see the full report of the Reserve Task Force.


Thank you to Robert Nordlund, CEO of Association Reserves, Inc., for providing the report on Task Force recommendations.

20/20--A VISION
FOR THE FUTURE

Adrian Adams will join a panel of attorneys at the Management Trust's Annual Director's Symposium. The program will be held on Friday, March 6 at the Agua Caliente Resort Casino in Rancho Mirage.

The legal panel's "Seeing Through the Fog" will discuss challenges boards face with new laws imposed by the legislature and the courts.

For more information see 2020 Vision Flier. Board members can attend this free event by sending an RSVP to Terri Jones.

Kudos #1. God I love your newsletter. -Terri G.

Kudos #2. I want to express my gratitude for CAI-CLAC’s work in serving as a counter to the excesses our legislature seems to so thoughtlessly embrace. -John W.

Kudos #3. Thank you for your great newsletter. -Patricia S.

Kudos #4. I always look forward to and enjoy your Newsletter. -Stan M.

Kudos #5. Thanks so much. I used to specialize in coverage work, but I also frequently represented common interest developments in civil litigation for one of my clients who insured lots of associations in Northern California. Every time I worked with a board or management company I referred them to your site, which I always found invaluable. I retired from active practice in early 2017, and the only thing related to my work that I still do is read your newsletter. Keep up the great work. -David B.

 

$75,000 Threshold. An item I believe CLAC should include in any proposed legislation is to raise the amount of assessment revenue when small HOAs have to engage a CPA to perform an audit or review. It has been set at $75,000 for decades by Civil Code §5305. Inflation is pushing small HOAs to include a couple of thousand dollars in their budgets for reviews as they cross the magic $75,000 threshold. It should be raised to $100,000+ and index it to avoid inflation creep in the future. -Philip A.

RESPONSE: Good suggestion. I will pass it on to CAI's California Legislative Action Committee.


Owner of 9 Units. I want to point out something relating to the question about the owner of 9 units who is running for the board. It should be noted that the law does not provide protection from personal liability if the director owns more than 2 units. Thanks for your wonderful work, as always! -Terri G.

RESPONSE: I'm glad you raised the issue. Very few owners of multiple units realize they are held to a higher standard than other board members when they serve on the board. Because of their ownership of multiple units, they are at risk for personal liability in excess of insurance coverage. I don't know the reasoning behind this provision, only that it exists. Following is the relevant language from the statute:

(a) A volunteer officer or volunteer director...shall not be personally liable in excess of the coverage of insurance...to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if [within the scope of their duties, in good faith and not willful, wanton or grossly negligent and the association carries at least $500k for 100 or fewer units or $1M if more than 100 units]...

(e) This section shall only apply to a volunteer officer or director who... is an owner of no more than two separate interests... (Civ Code §5800.)

Management Contract. Our association does not have a current contract with our property management company. The contract is 18 years old and the person who signed it as president of our association is now deceased. Is this a valid contract since the current president has not signed a new one? -Patricia S.

RESPONSE: If the contract has a provision that allows it to automatically renew each year, then the agreement is valid even though it's 18 years old. If the board wants a new contract, it will need to give notice of non-renewal to the management company within the time period specified by the contract. The board can then renegotiate the agreement with your current management company or enter into one with a different  company. The board should have legal counsel review the agreement and advise the board on how best to proceed. [NOTE: boards should always have all contracts reviewed by legal counsel when entering into or terminating them.]


Flower Boxes. I was hoping for some clarification on SB 326. Do elevated structures "designed for human occupancy or use" include flower boxes? -Heike

RESPONSE: Even though flower boxes are clearly designed for human use, it fails the statute's definition of load-bearing components:

...those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface elevated more than six feet above ground level, that are designed for human occupancy or use, and that are supported in whole or in substantial part by wood or wood-based products. (Civ. Code §5551(a)(3).)

Flower boxes can still be a problem if they hang over balcony railings or outside windows. When filled with soil and watered, they are subject to dry rot and can eventually fail. If they go crashing to the ground and injure someone, lawsuits will fly.

Unless your CC&Rs specifically state that owners are obligated to maintain, repair and replace flower boxes, the association is responsible for them. (Civ. Code §4775(a)(3).) That means they can become a source of potential liability. Accordingly, associations should inspect and repair flower boxes as-needed or amend their CC&Rs to assign that responsibility to owners.

ACCESSORY
DWELLING UNITS

Vehicles Only. Concerning ADUs, our rules state that garages are to be used only for vehicles. Will we have to amend rules to say something about allowing an ADU in the garage? -Linda H.

 

RESPONSE: No, you don't need to amend your CC&Rs. Restrictions in CC&Rs and rules that require owners park in their garages are automatically voided for those owners who convert their garages to ADUs. They still apply to all other owners, just not to garages that become apartments.

 
The ADU statute is so problematic, that boards will need guidelines on how to handle ADU requests. Our firm has already drafted ADU rules for a number clients. If your board would like more information, contact us.


Forced Housing. Our association has a large greenbelt space we call "the meadow." Given California’s push for more affordable housing and the recent legislation to change R-1 zoning and restrict local control over R-1 zoning, could the government require housing on our meadow? Can our HOA be required to allow multiple housing units on the existing lots within our community under the new changes to R-1 zoning? -Richard B.

RESPONSE: I certainly hope not. It would amount to a "taking" of the association's property. The new accessory dwelling unit (ADU) laws will create a huge mess. It strips controls from associations, and will make parking unmanageable, burden association amenities, and depress property values. The Golden State is becoming less golden with each new piece of legislation.

Homeless Encampments. It is more likely your meadow will become the site of a homeless camp. If so, the association may be obligated to remove the homeless and clean up the encampment at association expense. Governmental agencies are, at best, irrational when it comes to the homeless. They have done very little to address the problem. However, they are quick to bill homeowner associations for their own dereliction of duty.

Bill for Camp Cleanup. Last month, an association in the San Francisco Bay Area was charged $20,000 to clean up a former homeless camp that had been discovered in a ravine. That portion of the ravine turned out to be the association's property. Even though the association did not create the homeless problem, had no control over removing the homeless, and had no way of knowing the encampment existed in a heavily wooded corner of the association's property that was unmarked with fences, they were hit with a $20,000 bill.

Pleas to Law Enforcement. Many associations have complained that pleas to law enforcement about the homeless sleeping outside their gates, drug use, public urination and defecation, and assaults have gone unheeded. If you see homeless tents springing up in your meadow, you should immediately notify your association's legal counsel to start making demands on your city and county officials.


The Number of Rentals? Can planned developments in California limit the number of houses that are considered rentals? -Denise Z.

RESPONSE: This is another problem with ADUs. If your CC&Rs limit the number of houses that can be rented, your restriction is still valid, but only as to existing houses. For example, CC&Rs might state that no more than 20% of the houses can be rentals. However, the restriction does not apply to ADUs. That means you can have the absurd result where only 20 out of 100 houses can be rented but all 100 can convert their garages into apartments--which gives you 120 rentals (and the nightmare parking that goes with it).

MORE SB 323
DUMPSTER FIRES


The following is an email from a homeowner to Marjorie Murray about SB 323.

Dear Marjorie: Please help me understand how you intended SB 323 to make peoples’ lives better and who, specifically, you were intending to help. Perhaps you can make me a believer in the good that your organization endeavors to achieve. Respectfully, Robert C.

RESPONSE: Let me know how she responds. I think Marjorie believes her legislation somehow helps homeowners. She once cornered me as I was about to speak to a room of managers at a law seminar in Northern California. She berated me for calling her legislation a train wreck. Out of respect for Ms. Murray, I no longer call it a train wreck.


Nasty Grams. Getting lots of nasty grams from our lovely Marjorie Murray! I am sorry she is so upset that we don’t want SB 323. She tells me it is for the good of homeowners. Isn’t that what I am, a homeowner? Unreal. Her argument is sad. -Pam S.

Stunned! I confess I am stunned at the complexities and gnarly problems due to SB 323! It has proven to be both an enormous headache and a gigantic source of fees for HOA attorneys! Certainly that was never the intent of the legislature–or was it?? -Elaine J.

Disincentive to Volunteer. Our HOA is relatively small. We do not utilize a management company or employees. For the past 32 years our volunteers have successfully managed our association at no taxpayer cost. With the day-to-day workload it imposes on our volunteers, we really, really do not have the excess management capacity to deal with the sort of entirely inappropriate, pointless, time-&-money consuming regulation represented by a one-size fits all poorly written kludge like SB 323. The total impropriety of the requirements being imposed on us cannot be overstated. The entirely unwarranted imposition of unnecessary administrative costs and hours of work by our volunteers acts as a disincentive to the volunteerism on which a small HOA depends. -John W.

 
Meaningless Regulatory Compliance. I work a job that is more than full time and spend additional hours each month serving as on the board for my HOA. I have seen firsthand how SB 323 has added burden and expense to our way of life. We now spend even more time and money on meaningless regulatory compliance. Our association has had no difficulty using our accounting firm as the inspector of elections. It's included in their contract. Under SB 323 we are now required to hire another vendor to source, contract with, negotiate, manage and pay. -Robert C.
 
Four-Unit Association. The governing documents of our four-unit condo building make no provision for elections. Rather, all four owners are required to be board members with a rotation system for the office of president. Does SB 323 pertain to our situation? I’m hoping this is the one good thing about a really small association. -Dee F.
 
RESPONSE: You're lucky. From what you described, you don't have to comply with SB 323.
 
Automatic Amendment? Do you happen to know if incorporating SB 323 is an automatic amendment to our bylaws? I was told by the management company that no vote needs to be taken, just ratified. Any advice to navigate this situation would be appreciated. -Jennifer Y.
 
RESPONSE: No, it's not an automatic amendment but it's the equivalent--it makes unenforceable any provisions in your bylaws that are contrary to the mandates of SB 323. At some point, you will want to amend your bylaws. At the moment, however, you do need to amend your election rules. If you narrowly update them to comply with the strictures of SB 323, the rules can probably be approved by the board without being distributed to the membership for a 28-day review. If, however, the board includes any discretionary changes to the rules, they must go through s 28-day membership review followed by a vote of the board. If you are unsure how to proceed, check with your association's legal counsel.
 
NOTE: Another one of the many problems with the dumpster fire known as SB 323 is the prohibition against amending election rules less than 90 days before an election. (Civ. Code §5105(h).) With the separate mandatory 28-day notice period for membership review of proposed rule changes (Civ. Code §4360(a)), the waiting period for updating election rules is extended to 118 days (4 months) since the change cannot be approved by the board until the end of the 28 days.
 
Hopefully, this is another problem CLAC can persuade legislators to fix--elimination of the 90-day prohibition against election rule updates. 
 
Investor Candidates. Can absentee owners be on the board--especially if they are investors? -Gloria D.
 
RESPONSE: Yes, investors and absentee owners can serve on the board.  Only rarely have I run across bylaws that require directors reside in the development. That requirement is no longer valid. I don't recall ever seeing a provision prohibiting investors from serving on boards. If they exist, such restrictions are also invalid.
 
CORRECTION. Last week I responded to a question about elections by acclamation. I noted that SB 323 only applied to associations with 6,000 or more units and hoped the legislature would extend acclamation to all associations. Unfortunately, I hit "SEND" before finishing my thought. I intended to add that elections by acclamation can be used if specifically provided for in an association's governing documents--something I've advocated for years. However, not everyone agrees with me. I discuss the split in opinion on our website. See Uncontested Elections.
 
This is another in the long list of fixes that need to be made to SB 323--elimination of any ambiguity that all associations have the right to elections by acclamation when the number of candidates is less than or equal to the number of open seats.
Adrian J. Adams, Esq.
 
Boards can contact us for friendly, professional advice.

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

Dumpster Fire Election Questions

Feb 18, 2020 0 Views 0 Comments
We received so many questions related to elections that I'm dedicating this newsletter entirely to answering them. I have a backlog of questions on other issues and will cover them in future newsletters. -Adrian
 
Costly Bill. SB 323 is a disaster for associations. The mess created by Marjorie Murray's SB 323 is making attorneys rich & causing extra costs we can ill afford. It needs to be repealed ASAP. The cost of rewriting bylaws, going to a vote which will never pass and must be resent several times at a high cost plus attorney's fees, is a waste. How could such a measure ever be approved and why?? -Louise W., horrified property owner.
 
RESPONSE: Even though SB 323 is a dumpster fire, it's unlikely this burdensome bill will be repealed. At best, we can fix some of the more serious flaws and internal inconsistencies. CAI's California Legislative Action Committee (CLAC) is working on legislation to clean up the mess.
 
CAI-CLAC. Recognition should be given to CLAC's Executive Committee--they fought hard last year to stop SB 323 and came within one vote of defeating it. The Committee is currently working to undo some of the damage. Recognition should be given to:
 
Chair: Nathan McGuire, Adams|Stirling PLC
Vice Chair: Jeff Beaumont, Beaumont Tashjian
Treasurer: Julia Souza, The Management Trust
Secretary: Darren Bevan, Baydaline & Jacobsen
Co-Chair: Kieran Purcell, Epsten Grinnell & Howell
Co-Chair: Thomas Ware, Kulik Gottesman Siegel & Ware
PR: Natalie Stewart, FHA Review
Past Chair: John MacDowell, Fiore Racobs & Powers
 
In addition to our legislative advocate Louie Brown, there are delegates from around the state working on your behalf, you can see them here: CAI-CLAC Delegates.
 
CACM Advocacy. I understand the California Association of Community Managers (CACM) also worked to oppose SB 323. I'm not as familiar with their legislative activities but urge support of their efforts.
 
When the time is right, we will ask for readers' help to put out the dumpster fire created by the Center for California Homeowner Association Law (CCHAL).
 
Quorum of Voters. In our small association, we have a problem reaching quorum. We retain our existing board when that happens. Is this still allowed under SB 323? If it is and the only candidates for open board positions are members of the current board, do we still have to have the full-blown election process? -Sandy M.
 
RESPONSE: Sadly, yes. SB 323 does not make allowances for small associations, or for the inability to make quorum, or for uncontested elections. Until good legislation can be passed, the best way to address these problems is to amend your bylaws to eliminate quorum requirements for the election of directors and address elections by acclamation. We have done this for many associations and it has greatly simplified their elections. Not only does it reduce the cost and complication of elections, it alleviates some of the problems created by SB 323.

Delegate Qualifications. My association uses district delegates to elect the board of directors. Our management company advises that election requirements only apply to member votes and not delegates. Thus, additional qualifications for delegates are still permissible. One of the qualifications our HOA has for delegate candidates is that they attend a minimum of three general session meetings within six months preceding the distribution of the candidate interest form. Is this acceptable? -Jim K.

RESPONSE: Unfortunately, no. SB 323 impacts the election of delegates as well as directors. By statute, election rules must "specify the qualifications for candidates for the board and any other elected position." (Civ. Code §5105(a)(3).) That means mandatory and permissive qualifications for candidates and the procedures for electing them apply to delegates. You should talk to your legal counsel about amending your election rules.
 
Email Addresses. SB 323 added email addresses to the membership list information. Civil Code 5225 requires requests for membership list information be reasonably related to the requester's interest as a member. Is that still a requirement or can a member request membership information without giving a reason or for any reason whatsoever? Also, can an association's website list membership information without the member's explicit permission? -Lee B.

RESPONSE: Association's can still restrict how membership lists are used. For example, a member cannot request the list so he/she can solicit real estate listings. The request for a membership list must be reasonably related to a member's interest as a member--not for business purposes.
 
Websites. Member information should never be posted on public accessible websites. It exposes members to unnecessary solicitation and loss of privacy. Even with restricted website postings, members should be given an opportunity to opt-out before their information is posted.

Which Rules Apply? Our annual homeowner meeting is scheduled for February. Should we follow the new election rules or do they not apply until our 2021 election? -Leslie S.

RESPONSE: New election rules apply--they went into effect January 1.


Cumulative Voting. We received notice that cumulative voting will be used in our election even though our governing documents do not specify cumulative voting anywhere. Should we be using cumulative voting if our governing documents do not provide for it? -Angela S.
 
RESPONSE: No, cumulative voting should not be used. The Corporations Code states that "If the articles or bylaws authorize cumulative voting, but not otherwise, every member entitled to vote at any election of directors may cumulate the member's votes..." (Corp. Code §7615(a).)
 
Recall Elections. With SB 323, can a new board be elected at the same meeting if the recall vote is successful? Or, is the rigorous SB 323 nomination process required to elect a full new board after a successful recall vote? -Gail R.

RESPONSE: This is another problem created by SB 323. The timeline for electing directors is now much longer than the timeline for recalling directors. That means the two cannot be done simultaneously. As a result, the recall election must be conducted first. If successful, recalled directors remain in place until the election of replacement directors has occurred--a process that now takes up to 4 months thanks to requirements imposed by the Center for California Homeowner Association Law. This is really problematic and will need to be addressed by the legislature.
 
Election by Acclamation. By my reading of SB 754, it mandates acclamation for HOAs of 6,000 or more units, but does not deny it for smaller associations. The “shall” vs. “may” plays a role in this. What would be the purpose of wasting money on sending and counting ballots that are irrelevant? -Barb D.

RESPONSE: It would be wonderful if your interpretation of the statute were the case. Unfortunately, acclamation only applies to associations with 6,000 or more units--and only if they follow the requirements imposed by SB 323. See Civil Code §5100(g). With luck, the legislature will extend acclamation to all associations
.

Email Addresses. Can the board "opt out" all homeowners from the membership email list and request that anybody who wants to "opt in" to make their e-mail addresses available to other residents, can do so. We worry that some folks do not want their e-mail disclosed, but failed to opt out. -Tom W.
 
RESPONSE: With the steady increase in junk email, identity theft, malware and hacking, most owners do not want their email addresses made public without their permission. Unfortunately, SB 323 exposed email addresses unless members specifically opt-out. Hopefully the legislature will undo this provision.
 
QUESTION: A current board member who is re-running for election owns nine units. Is it legal for her to vote for herself nine times on the ballot? -Raghda Z.

RESPONSE: Yes. If she owns nine units, she has nine votes. Worse, if your bylaws allow for cumulative voting and there are three open seats, she has 3 x 9 = 27 votes she can cast for herself. I recommend your association amend your bylaws to eliminate cumulative voting.


QUESTION: If a board member resigns term and the board fills the vacancy, does that person remain for full remainder of the person's term or just to the next election? -Raghda Z.

RESPONSE: Normally, anyone appointed to fill a vacant seat serves for the remainder of the term assigned to that seat. You should check your bylaws to see if they require something different.


QUESTION: Our association paid our attorney to update our outdated CC&Rs and bylaws. With the passage of SB 323, we had to pay for additional updates. We understand the law has major flaws. Is the “clean-up” going to cause us to make more changes to our CC&Rs and bylaws? –Becky D.

RESPONSE: Yes, that's a possibility. SB 323 is the gift that keeps on giving. If the major flaws in the bill can be corrected, your election rules may need to be updated again.


QUESTION: We are a small association. SB 323 is written in legalese so that any normal person cannot understand the new code. It requires hiring a lawyer to interpret the contents and that poses a financial problem for small associations. Why is there not a version for layman to understand? Of course we want to comply with the new law but there should be a simple version explaining the new requirements. -Daniel G.

RESPONSE: SB 323 is so badly drafted that law firms around the state put in overtime untangling the impact of the bill. To help boards and managers interpret this dreadful legislation, many firms published summaries. You can find ours at Election Timeline and Candidate Qualifications. For a complete outline of the election process, go to the Election Menu.
 
QUESTION: Can candidates running for the board mail information about themselves to offsite owners? -Elaine B.
 
RESPONSE: Yes, they can. They can request a copy of the membership list and then send letters, postcards and flyers to members.
 
Ethics Policy: At our board meeting, the agenda included new directors signing an ethics policy adopted by the board in 2019. One carry-over director who signed it in 2019 claims the policy expired after twelve months because our governing documents don't permit contracts with a term longer than twelve months. I believe policies adopted by the board are in effect until modified or eliminated by the same or subsequent boards. They do not automatically expire at the end of twelve months. Is this correct? -Sue O.
 
RESPONSE: Yes, you are correct. Signing an ethics policy is not a vendor contract with a one-year limit. It's a commitment by a director to abide by the association's ethics policy. Your carry-over director's commitment to abide by your ethics policy remains in effect until he repudiates it. It does not expire after 12 months and leave him free to engage in unethical behavior.
 
Inspectors of Election. If we appoint a homeowner to act as our inspector of elections, will they be covered by our insurance? -Fred M.
 
RESPONSE: That is a really good question. In a recent article published by Ryan Gesell and Timothy Cline of the Cline Insurance Agency, the authors pointed out that protection of volunteer inspectors depends on whether the association's D&O policy covers volunteers for non-monetary claims and the person was specifically identified in the minutes as a volunteer.
 
They also raised the problem of whether a volunteer could comply with the extensive duties now imposed by SB 323. To minimize exposure to liability, Gesell and Cline recommend that professional inspectors of election be hired by associations. I agree.
 
Hiring a professional should shift liability away from the association. Unfortunately, professional inspectors also recognize the inherent problems in conducting HOA elections. As a result, many include language in their contracts requiring the association indemnify them from potential liability. 
 
As Gesell and Cline noted, since D&O policies extend coverage to volunteers, not professional inspectors, associations could find themselves paying to defend election results, should a claim arise. The authors pointed out that insurance policies are available for professional inspectors of election. Some offer the option of adding associations as additionally insured. Accordingly, boards should ask about insurance when hiring professional inspectors of election.
 
For more information about insurance issues, boards should check with their insurance agent or call Ryan Gesell or Timothy Cline at the Timothy Cline Insurance Agency.
 
ELECTION RULES. Election RulesAll associations must adopt new election rules to comply with SB 323. Failure to do so could subject elections to legal challenge and may result in new elections, monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules.
 
HIRING LAWYERS


We are looking for experienced attorneys to join ADAMS|STIRLING.
Candidates should have at least five years' experience as an attorney.
We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Meeting Without A Manager

Feb 9, 2020 0 Views 0 Comments

QUESTION: What happened to the Newsletter? I haven't received one at all in 2020 and can't find any on your website. -Sally B.

ANSWER: I'm glad you asked. In addition to the enormous amount of work generated the new election rule requirements, we've been busy hiring attorneys. Later in this newsletter is an introduction to attorney Megan Hall. Other introductions will be made in later newsletters.

Election Feedback Needed. Speaking of election rules, CAI-CLAC is reviewing how best to introduce much-needed clean-up legislation in the wake of the mess created by SB 323. To that end, they need to know if your association experienced any costs or problems due to the new election requirements. Please report your experiences to CAI's Legislative Strategy & Research Committee at [email protected]. Your feedback will help legislators understand why we need to fix this badly flawed legislation.

MEETING WITHOUT
THE MANAGER


QUESTION: Our board properly posted a meeting notice and agenda 4 days prior to the meeting. Our manager said the meeting must be done over because she was not aware of the meeting and did not attend. Do we need to do everything over?

ANSWER: No, you don't need to repeat the meeting. The manager's presence at a board meeting is not what makes it valid. Board meetings are valid when they are properly noticed along with an agenda and a quorum of directors is present.

RECOMMENDATION: Check again with the manager, she must be concerned about a procedural issue. If it's still unclear, check with your association's legal counsel.

BUDGET DEADLINE
AND DUES INCREASE


QUESTION: Our association's fiscal year begins February 1. As of mid-January, the board has yet to deliver a pro-forma budget for the upcoming fiscal year. Our CC&Rs require budget notice no less than 30 days before the start of the fiscal year. What are the consequences for failure to deliver the budget?

ANSWER: The Davis-Stirling Act requires the annual budget be distributed to the membership not less than 30 nor more than 90 days before the end of the association's fiscal year. (Civ. Code §5300(a).) Actually, it's more than the budget. It's a budget report consisting of the following:

  • a pro forma operating budget;
  • a summary of the association’s reserves;
  • a statement regarding any deferral of reserve item repairs;
  • a statement whether special assessments are anticipated related
     to reserves or reserve components;
  • a statement of how reserves will be funded;
  • a statement of how the reserves were calculated; 
  • a statement regarding any outstanding association loans; and

In addition, there are a number of policy disclosures that must be distributed to the membership.

Failure to Timely Distribute. Failure to distribute the budget report not less than 30 nor more than 90 days prior to the end of the fiscal year voids any increase in regular assessments approved by the board of directors. Any such increase in dues must then be approved by a majority of a quorum of members. (Civ. Code §5605(a).)

MEGAN HALL
JOINS ADAMS|STIRLING


I am pleased to announce that attorney Megan Hall joined our firm.

Diverse Clients. Prior to joining ADAMS|STIRLING, Megan represented a diverse client base from the San Joaquin County to individuals in business. She dealt with employment issues, personal injury, CEQA, unlawful detainer and probate matters.

Litigation. Megan has extensive experience litigating matters for clients. In addition to mediations and arbitrations, she handled depositions, motions, summary judgments, trials, and settlements. Megan brings her diverse litigation background into corporate transactional matters for our clients.


Education. Megan earned a Bachelor of Arts with a major in Political Science and minors in Business and Communications from the University of Oregon. This was followed by a Juris Doctorate from the Santa Clara University School of Law in Santa Clara, California where Megan was on Law review and Honors Moot Court.

We are delighted to have such an experienced attorney join our team. If your association needs legal services, contact us for a proposal.

HIRING LAWYERS


We are looking for attorneys to join ADAMS|STIRLING.

Candidates should have at least five years' experience as an attorney.

We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.

 


Kudos. I spoke with you many years ago while I was still president and manager (for 10 years!) of an HOA. I have since moved on and am no longer in an HOA. However, I just want you to know how much I enjoy your newsletter, how informative it is, and will continue to do so as an attorney "wannabe." I can just observe that with the way the legislature and Ms. Murray are screwing things up, I'm glad I'm out! Keep up the good work! -Bob T.

RESPONSE: I can't complain too loudly about Marjorie Murray and her Center for California Homeowner Association Law (CCHAL) making such a mess of things. Ms. Murray has been a boon for business for law firms all over the state. I may send her a fruit basket. Unfortunately, the legal work she generates comes at the expense of 9 million homeowners who live in community associations.


Newsletter. Can you guys include a PDF attachment that shares the same info as each newsletter but it’s formatted so we can print it and save them in a binder for reference? -John H.

RESPONSE: We post newsletters on our website at: www.Davis-Stirling.com/Newsletters. You can always go there to print newsletters. We only post current and prior year's newsletters. Posting anything older runs into the problem of constantly changing laws which makes some information in our newsletters out of date. For current information, go to the Index on the Home page of Davis-Stirling.com to look up topics or use our website's Google search to find what you need.

ELECTION RULES. Election Rules I have a lot of feedback material to cover in my next newsletter. I could not get to it this week due to the large amount of legal work generated by Marjorie Murray's SB 323.

As previously noted, all associations must adopt new election rules. Failure to do so could subject elections to legal challenge and may result in monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Dealing Drugs From A Unit

Dec 2, 2019 0 Views 0 Comments


QUESTION: Can a board be held liable if a unit owner has a permanent house guest that is dealing drugs from the unit?

ANSWER: Neighbors are understandably concerned for their safety when they see a stream of strangers going into and out of a unit--some of them rough looking. If a resident suffers harm or damage as a result of the drug-dealing resident, and the board had knowledge but did nothing to stop it, you can be sure the injured person's lawyer will include the association in his/her lawsuit.

RECOMMENDATION: If directors believe a unit is being used to deal drugs, they should notify the police of their suspicions. They can send a letter to the police department (or have legal counsel do so).

Notify Owner? It's possible that a letter by legal counsel to the resident may be sufficient to get the person to move their operations offsite. If the resident is a tenant, then a letter to the owner/landlord expressing concern and putting them on notice of potential liability may cause the landlord to take appropriate action.

Paper Trail. Beyond putting the resident on notice and notifying the police, there is very little the board can do. If the police do nothing and someone is harmed, the board will have a paper trail showing it took appropriate action to protect the membership. This should be sufficient to shield the association from potential liability.

EV CHARGING STATION
POWER CORD

QUESTION: We recently had a homeowner request permission to install an EV charging station in his garage. That wouldn’t be a problem except he wants to use it to charge a car outside his garage.

The Board feared that would represent a trip hazard as the cord would cross common area sidewalk. We consulted with legal and were told that was a legitimate cause to deny the request particularly in light of the fact that the owner did have the option of clearing out the garage and charging it inside.

ANSWER: Safety trumps. Your owner can have charging station in his garage, provided he clears it out and parks his car in his garage where he can safely charge it.

7th ANNUAL
ABCs of HOAs
Adrian Adams will be speaking at an annual educational event open to all board members.
 
In addition to year-end legal updates by Adrian, Neda Nehouray will cover board management responsibilities and procedures, and Dr. Lori Baker-Schena will discuss ways for boards to strengthen leadership skills.
 
This free event by HOA Organizers will be held:
Date: Saturday, December 7, 2019
Time: 11 a.m. to 3:30 p.m.
Location: 11301 W. Olympic Blvd, Los Angeles
HIRING LAWYERS

We are looking for experienced attorneys to join ADAMS|STIRLING.

Candidates should have at least five years' experience as an attorney.

We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.

 

Kudos #1. Thank you so much, I love the newsletter! Happy Thanksgiving to you all. -Debra C.

Kudos #2. Thank you for all you do in keeping HOAs informed and protected. -Steve C.

Kudos #3. Thank you for providing Marjorie Murray’s email address. Thanks for your outstanding newsletter—it has been part of my Sunday routine for many years. -John P.

Kudos #4. I love to read your newsletter because there is so much information that I couldn’t get elsewhere. Thanks for what you do. -Yvonne G.

Kudos #5. Thank you for your newsletter. I hold the position of Treasurer for my HOA and several of our board members find great value in the information you provide. -Robert C.

*****
SB 323. The problems and confusion created by Marjorie Murray's election bill continues to dominate the feedback I receive from readers. As with prior newsletters, I cannot print all the emails; there are too many. -Adrian
 

Nightmare Bill #1. I think I have a fair understanding of the impact of SB 323 on small HOAs like ours, but I'm not sure Marjorie Murray does. Please see the exchange I had with her. -David P.

[When questioned about her opposition to elections by acclamation, she responded with:] Our Center TOOK NO POSITION on the acclamation bill (SB754) after it left the Senate... Marjorie Murray, President & CEO, Center for California Homeowner Association Law

RESPONSE: Ms. Murray's response is misleading. You notice she said her organization took no position after it left the Senate. She neglects to disclose what CCHAL did before it left the Senate.

If you go to the website for California Legislative Information, click on the tab "Bill Analysis" and go to 4/18/19, you will find the following as reported to the Senate Housing Committee:

SUPPORT: Laguna Woods Village (Sponsor), California Association of Community Managers, Community Associations Institute - California Legislative Action Committee.

OPPOSITION: California Alliance For Retired Americans, Center For California Homeowner Association Law

The Community Associations Institute (CAI) supported election by acclamation, while Ms. Murray's organization opposed it. Next, go to bill analysis for the Senate floor vote dated 9/13/19. It has the following:

Arguments in Support: Laguna Woods Village, sponsor of this bill, states that it will provide much-needed relief from expensive and unnecessary elections for HOAs. The sponsor states that it has spent $60,000 on uncontested elections each year in the last two years alone, despite outcomes predetermined by the fact that there were more board seats available than there were people willing SB 754 to fill those seats. The cost of these elections directly impacts residents, as it increases monthly assessments.

Arguments in Opposition: Opponents state that allowing election by acclamation would enable an HOA board to ignore or prevent nominations by nonincumbents, then determine that no election is required due to an insufficient number of candidates. The Center for California Homeowner Association Law cites a number of reports from homeowners describing how they were either discouraged from running for a seat on an HOA board, or were prevented from running for a seat because they did not meet certain qualifications set by the board.

CCHAL Opposition: Ms. Murray's organization opposed elections by acclamation claiming it enabled boards to ignore nominations. How? Under the existing law, all qualified candidates are listed on a ballot, whether incumbent or not. Her CCHAL further justified its opposition by claiming some owners were not qualified. It's a bit disingenuous since one has nothing to do with the other. Moreover, CCHAL's own legislation (SB 323) sets mandatory and permissible qualifications which will prevent some owners from running for the board.

Opposition to Electronic Voting. In addition to training homeowners how to sue their associations and opposing elections by acclamation, Marjorie Murray's organization killed a bill six years ago that would have reduced the cost of elections by allowing electronic voting. Here is their opposition when AB 1360 was introduced:

Arguments in Opposition: The Center for California Homeowner Association Law (CCHAL) opposes this bill and raises concerns that the bill could jeopardize the secrecy of the ballots. CCHAL contends the bill does not address several key questions, including how secrecy of the ballots will be maintained, how electronic ballots can be audited, and what the chain of custody is for ballots in electronic balloting. CCHAL maintains that the rationale for the bill is that electronic balloting increases voter participation, but that no research from a neutral third party establishes that this outcome will be achieved.

Clean-up Legislation. Hopefully, the Community Association Institute's California Legislative Action Committee (CAI-CLAC) will submit legislation next year to clean up the mess created by CCHAL. It may also be time to reintroduce electronic voting.

Unlike Ms. Murray's organization, CAI-CLAC lobbies for common sense legislation and opposes bad legislation. Readers who have not already done so should sign up for regular updates on legislation via CLAC-TRAC E-News. In addition, CAI-CLAC's Hot Bills page issues "Calls to Action" for support on critical bills.

Nightmare Bill #2. Seven of the HOAs I manage have only 4 or 5 members. Do we have to pay someone to attend their annual meetings to count 4-5 ballots??? -Jean K.

RESPONSE: CCHAL provided no relief for small associations. However, a provision in the existing law which carries over to 2020 allows a disinterested member to act as the inspector of elections and count ballots.

Nightmare Bill #3. Does the new elections law apply to unincorporated HOAs? I am in an HOA with eight units, and the board doesn’t think we need to follow the law because we are small and unincorporated. -Yvonne G.

RESPONSE: Being unincorporated does not give you any relief. I suspect many small associations will ignore the burdensome requirements of SB 323 and hope they don't get sued by a disgruntled homeowner.

Nightmare Bill #4. I sent an email to Marjorie Murray asking why she burdened homeowners with expensive legislation. She responded with: "What expenses do you believe are levied by SB 323? Please quote from the bill itself. -Marjorie Murray, President & CEO" -Robert C.

RESPONSE: That's a clever deflection by Ms. Murray. There are no dollar amounts in the bill--the costs are in the bill's requirements. Her bill requires rewriting election rules for over 55,000 homeowner associations in California. SB 323 is so convoluted that associations will need legal counsel to write them. She also voided all director qualifications in bylaws except those she approves. That will require costly amendments for tens of thousands of associations. In addition, her organization extended the election cycle to one-third of a year and added more expensive mailings to the process, thereby increasing election costs.

Finally, Marjorie Murray exposed everyone's email addresses to the entire membership. Associations will need to spend money sending and collecting opt-out forms for 9 million homeowners to avoid this unnecessary intrusion into their privacy.

If Ms. Murray thinks her bill imposes no costs on associations, perhaps she will volunteer to pay any expenses incurred by associations?

Nightmare Bill #5. Since the pre-ballot notice (distributed 30 days before ballots are mailed) includes the list of voters, what happens if there are new members between the date the notice is mailed and the election date? We used to set a Record Date by which someone had to be a member in order to vote. Can the pre-ballot notice be used as a Record Date? If not, do we need to re-notice the membership with an updated voter list? -Shelly D.

RESPONSE: Making the pre-ballot notice date the "record date" for determining eligibility for voting works for me. I don't believe you need to send updated voter lists when units change hands in the 60-day period leading up to the election.

Nightmare Bill #6. The requirement that election inspectors must have no previous contractual relationship with the association: once we secure a new election inspector, would we be required to find a different one every year? Yikes! -Shelly D

RESPONSE: Your contractual relationship with an inspector of elections is for the election for which the inspector has been retained and then terminates, thereby making the inspector eligible for future elections.

Nightmare Bill #7. With the votes being counted this coming January 17, 2020, what laws for election must be followed? Our call for candidates (November 2019) has already happened. -Teri P.

RESPONSE: In 2005 when the original election law was adopted, the legislature recognized it would take time to implement its requirements and delayed the effective date to July 1, 2006. Marjorie Murray's organization allowed no such grace period. That means their requirements take effect January 1, 2020. Even though your call for candidates took place under existing laws, your election on January 17 will be under Ms. Murray's strictures. I think you can proceed with your election as long as you appoint an independent inspector of elections.

Nightmare Bill #8. Marjorie Murray's bill is unconstitutional as it is dictating and pushing requirements into personal lives and HOA contracts. From what I understand, there are rights and processes in the law for individual HOAs to change their OWN rules. Why can one entity be allowed to change rules for all?? Is there any hope for push back on some of the questionable requirements of Marjorie Murray's bill? -Steve C.

RESPONSE: It's no secret I am unhappy with the harm done by Ms. Murray's organization. I understand CAI-CLAC is considering ways to clean up some of the mess created CCHAL. We will let everyone know next year when legislation is submitted.

Nightmare Bill #9. If a dedicated elections inspector using the resources of our management company sends out ballots as prescribed by our bylaws but no ballots are returned, can nominations from the floor be utilized to elect the three-member board? -Terry M.

RESPONSE: Yes. The bill allows for floor nominations even though they run contrary to other provisions in the bill.

Nightmare Bill #10. What can the HOA do if there are no members willing to serve on the board and current directors resign? I asked our management company and they only alluded to a state agency taking over receivership of our HOA. -Terry M.

RESPONSE: A receiver would be very costly for your association and would likely result in significant dues increases and/or special assessments. You really don't want to go down that path. See Collapse of an HOA.

Nightmare Bill #11. Our bylaws state that if there are not more nominees than open seats on the board, an election is not needed. I've tried to find this in the new election rules and it isn't clear if this is still valid. Our HOA has five units and we have never had more candidates than open slots. This new bill truly is a nightmare for tiny associations like ours. -Elaine L.

RESPONSE: If it's provided for in your bylaws, I believe election by acclamation is allowable. However, there is disagreement in the legal community on whether it can be done. See Uncontested Elections. The best way to eliminate uncertainty is to rally support behind a bill that would allow elections by acclamation for all associations.

Nightmare Bill #12. The board is getting ready to take a vote on new bylaws. What happens when the community vote fails due to not enough votes? -Nadine

RESPONSE: You could petition the court to approve the bylaws under section 7515 of the Corporations Code. This is different from a Davis-Stirling petition to amend CC&Rs. We have been successful obtaining court approval when apathy derails bylaw amendments. Contact us if you need assistance.

ELECTION RULES. Election RulesAll associations must adopt new election rules to comply with SB 323. Failure to do so could subject elections to legal challenge and may result in new elections, monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules.

*****

Fidelity Insurance. I enjoy the weekly newsletter. In the one I just received, you refer to a “Fidelity Bond.” Instead of a bond, associations will actually purchase an insurance policy that covers employee dishonesty (fidelity) plus non-employee theft. A bond is a three party arrangement. Insurance is not.

Preferred Terminology. The preferred terminology is a Fidelity/Crime policy. The policies are two sides of a coin. On one side is Fidelity/Employee Dishonesty and on the other side is non-employee crime coverage.

Standalone Policy. Associations should ask for a standalone policy. Although some of the required coverage is found in an association's Master Package Policy, they generally have minimal limits that do not comply with statutory or Fannie Mae or Freddie Mac requirements. More importantly, they often do not cover wire transfer fraud, computer fraud, or social engineering. -Joel W. Meskin, Esq., CIRMS, CCAL Fellow, MLIS, EBP, Managing Director Community Association Products, McGowan Program Administrators

RESPONSE: Joel, thanks for raising the point. Unfortunately, it will be difficult changing the terminology in California since the Davis-Stirling Act uses the term "Fidelity Bond" in Civil Code §5806. Maybe we can get a clean-up bill on this issue.

*****

Banking. Your reader who commented on master banking policies is not precisely correct. They implied that the management company is a signer on the association’s bank account.

While many (maybe the majority of) management companies are signatories on the association’s account (which I think is very unwise for the association to allow), many are not.

We use the master banking policy for many good reasons (not the least of which is we can attest to the fact that the board signatories are who they say they are, which avoids members not having to show up at the bank and produce their ID every time the board changes.

However, we are NOT signatories on the association’s account, both by contract with the association and by our agreement with the bank. If the board does not want the managing agent as a signatory on their bank accounts, they should contractually prohibit that. However, that has nothing directly to do with the master banking policy. -Roy Helsing, The Helsing Group, Inc.

RESPONSE: The banking industry is constantly changing and some of the banking provisions in the Davis-Stirling Act may no longer be relevant. If someone could send me a full description of a master banking policy and its pros and cons as it relates to the HOA industry, I will add a page to the website.

*****

ADUs #1. Can an owner convert his garage into a junior ADU and then never rent it out so he effectively increases the square footage of his house and its resale value? -Troy K.

RESPONSE: I had not thought of that angle. I suppose people could game the system to add living space to their houses, increase their property values, and push cars to their driveways and streets.

ADUs #2. Has there been any discussion of going the proposition route to repeal the ADU laws? -Tim S.

RESPONSE: Not that I'm aware of. Instead, there has been some interest in suing the state to stop the injection of ADUs into homeowner associations. If any associations want to band together for that purpose, let me know--I will put you in contact with each other.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Management & Banking Security

Nov 24, 2019 0 Views 0 Comments

QUESTION: We use a third-party management firm to handle our accounting. They, in turn, have master relationships with several banks. Their clients become customers of their banks and the management company receives the benefit of lockbox services and computer integration. The management company is the master signatory, and associations designate their own signers.

We are a little concerned about the security and legality of this relationship. As a practical matter, the management company and any employees they designate are empowered to take any act with our account--write checks, wire money, open additional accounts, etc. This not only seems goofy to us it but at odds with the information we've read on your website about association bank accounts.

ANSWER: You’re right to be concerned, though it isn’t clear whether there's anything across the line here. There are disclosure requirements of affiliate relationships which should be verified. (See Manager Disclosure Requirements.) Also, the association should be comfortable with whoever is a signer on the account. You want to make sure the arrangement is acceptable to your Fidelity Bond insurance carrier.

Financial Oversight. After AB 2912 passed last year, certain electronic transfers require prior written board approval. The transfer of funds from reserve accounts have specialized requirements as well. If directors are uncomfortable with their current situation, the board should look into other arrangements.

Thank you to ADAMS|STIRLING partner
Nathan McGuire for answering this question.

HIRING LAWYERS

We are looking for experienced attorneys to join ADAMS|STIRLING.

Candidates should have at least five years' experience as an attorney.

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Kudos #1. Love your newsletter—always extremely informative. And your sense of humor somehow makes all the legal stuff more palatable! -Maggie L.

Kudos #2. Thanks for one more great newsletter. -Finn M.

Kudos #3. Once again a great newsletter with clear advice and counsel. Thank you for taking the time to produce and disseminate this information. You provide excellent information. -Donna G.

Kudos #4. I thank you for all the valuable information from your newsletters. I forward it to our HOA members. -Nancy B.

Kudos #5. Thanks again for this wonderful newsletter. It's one of the few things I try to read every week. Brilliant caution about paying a member to be an inspector of elections. -Henry C.

Kudos #6. Thank you for your continued updates & providing HOAs insight on a multitude of areas associations are required to address; much appreciated! -Suzie W.

Kudos #7. Thank you for the newsletter -Henry S.

*****

Aggressive Dogs #1. Your response on liability for dog attacks is very timely. I have an issue with a neighbor who walks his dog (a large German Shepherd) twice every day throughout our community, off leash. He has been warned by the HOA with no results. He has been warned twice by Animal Control, with no result. Unless Animal Control catches the dog, the owner is not fined. What other penalties can be assessed to enforce the HOA and city/county rules. -Sheila C.

RESPONSE: In addition to fines by Animal Control, the association can hold hearings and assess its own fines. A letter from your association's law firm will add more weight to your demand for compliance. If all else fails, the association can sue the owner.

Aggressive Dog #2. I would suggest that, in addition to rules, hearings, fines for dog owners, dog owners (any breed) must be required to carry insurance naming the association as additional insured. -Stephany Y.

*****

Nightmare Bill #1. I have the answer about why an exemption of 6,000 or more units can conduct elections by acclamation. The Leisure World community (now called Laguna Woods) in South Orange County has a stock co-op with 6,323 units and they supported the bill touting that it would save money on their elections. -Kirk W.

RESPONSE: Election by acclamation clearly saves money. It's unfortunate that associations under 6,000 units have been denied this cost-saving measure.


Nightmare Bill #2. Does anybody know how many homeowner associations in California have more than 6,000 units and would qualify for this special treatment? -John W.

RESPONSE: I checked with Levy, Erlanger & Company LLP, a CPA firm in San Francisco that specializes in common interest developments and maintains a database of associations in California. Of the ~55,000 associations in the state, their database tracks 49,000 associations and publishes an annual report on the size, age, annual revenues and development types (condos, planned developments, tenancies in common (TIC), and stock cooperatives) in each county. Their database shows there are 55 associations with 6,000 units or larger. For more information, see "2019 California Community Association Statistics."

Nightmare Bill #3. So if an HOA with less than 6,000 units approves directors by acclamation (where the number of candidates does not exceed the number of vacancies), what is the harm? -Glen G.

RESPONSE: There is no harm. However,
because Marjorie Murray's CCHAL opposes this cost-saving measure, a disgruntled owner can sue and invalidate your election and have a fine levied against the association. CCHAL must think the world will come to an end if homeowners were to save a little money.

Nightmare Bill #4. I can hardly imagine a community with 6,000 units. Does this exception mean that if a community has 5,999 units, it wouldn’t qualify for election by acclamation? -Louise H.

RESPONSE: Yes, that's what it means. It makes no sense.
When the number of candidates is equal to or less than the number of open board seats, an association with 6,000 units can hold an election by acclamation but one with 5,999 units cannot. Since only 5,000 associations in the state qualify, the other 50,000 associations have to spend money to conduct meaningless elections. You might let Marjorie Murray know that you disagree with her opposition to elections by acclamation: [email protected].

Nightmare Bill #5. Our bylaws provide for 3-year terms and then one year off before you can run again. Under the new bill is the year off permitted? -Finn M.

RESPONSE: Unfortunately, no. Marjorie Murray's bill knocked out all candidate restrictions except the ones she deemed worthy. SB 323 does not allow associations to keep a qualified candidate from running for the board. It runs afoul of the bill. Therefore, term limits are voided. I know it's silly but that's what Ms. Murray's organization gave us.


Nightmare Bill #6. I live in a 55+ community. Our bylaws allow only owners living here to be on the board. Does 323 allow under-55 year-old, nonresident owner-investors to be on the board? -Brian H.

RESPONSE: Unfortunately, yes. Residency in a 55+ community and age are not on CCHAL's list of approved qualifications.


Nightmare Bill #7. Under the new law, can we still have write-in candidates and floor nominations?

RESPONSE: This is yet another problem with Marjorie Murray's bill. SB 323 has an internal conflict. It allows write-ins and floor nominations but it also requires that a list of candidates be published at least 30 days before ballots are distributed to the membership. You can't do one without violating the other. To eliminate the problem, we are eliminating write-ins and floor nominations from bylaws and election rules.

COMMENT:
I'm sure Marjorie Murray and her Center for California Homeowner Association Law are proud of what they've done to the 9 million homeowners living in community associations: no term limits, elections cycles lasting 1/3 of the year, confusing deadlines, unresolved conflicts with director recall timelines, loss of homeowner rights to establish qualifications for their directors, loss of email address privacy, increased cost of elections, greater exposure to litigation, forced rewrites of election rules, a topsy-turvy document hierarchy, 55+ community restrictions upended, and elections by acclamation limited to associations with 6,000 units or more. You can send Ms. Murray an email expressing your gratitude: [email protected].

Election Rules. Election RulesAll associations must adopt new election rules. Any election conducted without new rules will be subject to legal challenge and may result in monetary penalties and an award of attorney fees. To avoid this, contact us for new election rules.

*****

ADUs #1. I appreciated your discussion of the new ADU law. Your remarks about mobilehome parks might be a bit off. Most are built under Title 25 of the California Code of Regulations and are regulated by the Housing and Community Development Department. I haven't read that AB 68 overrules state housing regulations. -Henry C.

RESPONSE: I hope you're right. It would provide needed relief to planned development mobilehome parks.


ADUs #2. In our planned development, the CC&Rs define "Lot" as not being owned in common with other owners of lots in the development and not common area. Of our 134 residences, only five have garages on their lots. The remaining garages/carports are located in the common area. Since these are not a part of a residence, are they exempt from the ADU law? -Suzie W.

RESPONSE: If garages and carports are part of the common area, they are not eligible for conversion to ADUs. (At least for the moment--who knows what will happen when the legislature reconvenes.)

*****

Elevated Structures. I manage an association that is underfunded in their reserves. They are only 20% funded and in desperate need of repairing their balconies. We had seven balconies inspected a few months ago and the structures underneath are in bad shape.

We want to raise the dues $40 per unit for 2020 because in 2014 they lowered the dues from $330 per month to $250 per month. In addition, we need a special assessment to repair the balconies ($5,000 spread over one year). I just received a petition signed by 27 owners saying they do not want to raise the dues and will not approve a special assessment.

Besides giving notice to terminate my contract, I can’t work with people like that. -Sharon H.

RESPONSE: Terminating your management contract is a smart move. When the balconies eventually collapse, lawsuits will fly. In addition, large special assessments will be levied--much larger than the one you proposed. If you were still managing the association, you would get caught up in the litigation even though you warned them. If the association somehow manages to avoid any collapses, the law will catch up with them in five years.

Beginning January 1, 2025, condominium associations will be required to conduct inspections of waterproofing systems (flashings, membranes, coatings, and sealants that protect the load-bearing components of exterior elevated structures) and load-bearing components six feet above ground, supported substantially by wood (such as balconies). All structures must then be reinspected every nine years. (
Senate Bill 326.)

Inspector's Report. The inspector must submit a report to the board providing the physical condition and remaining useful life of the load-bearing components and associated waterproofing systems, which must be incorporated into the association's reserve study.

Local Agency Notified. If the inspector finds that the exterior elevated element poses an immediate threat to the safety of the occupants, the inspector must notify the local code enforcement agency within 15 days of completion of the report.

Immediate Action. Upon receiving the report, the association must take preventive measures immediately, including preventing occupant access to the exterior elevated element until repairs have been inspected and approved by the local enforcement agency.

RECOMMENDATION: Homeowners should rally behind the special assessment and needed repairs. If they don't and they try to sell their units, they must disclose the known condition of their balconies and the likelihood of a large special assessment to address the problem.

If the membership rejects a special assessment, the board should impose a 20% dues increase this year, next year and the following year to raise funds to make repairs and rebuild reserves. If the membership votes them out of office, directors voting for the increased assessments will be insulated from future liability since they took steps to raise funds to fulfill their fiduciary duties.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Liability for Dog Attacks

Nov 18, 2019 0 Views 0 Comments

QUESTION: What responsibility does an association have if a dog they know has a history of aggressive behavior attacks and injures someone? Can the victim sue the HOA for damages? What can a board do to deal with animals that have shown aggressive behavior so the HOA is not liable?

RESPONSE: Yes, an association can be sued if it fails to protect its members against a known foreseeable harm. (Frances T. v. Village Green.)

To minimize potential liability, whenever a board receives reports of an aggressive dog, it should call the owner to a hearing. In addition to a warning and/or fine, the board should require the dog be kept on a leash and muzzled at all times whenever it is in the common areas. 


RECOMMENDATION: To make sure the owner understands the seriousness of the situation, have your association’s legal counsel send a letter laying out the requirements and threatening to sue the owner if they are not followed.

MISDEMEANOR
FOR GOING OVER 3 MINUTES


QUESTION: Our board is threatening to charge homeowners with a misdemeanor if they go over the 3-minute limit in comment time. They quoted the penal code. Can they do that?

ANSWER: Boards cannot charge someone with a misdemeanor. It is outside their jurisdiction. A misdemeanor is a criminal offense levied by a governmental authority and punishable by a fine and/or incarceration in a local county jail. (Penal Code §647.)

At most, a board can adopt a rule that could result in a hearing and a penalty if the rule is violated. It's unlikely a board would fine someone for running over on their 3-minute open forum time. I can see it, though, for someone who tries to derail a board meeting by refusing to sit down and stop talking. Disruptive behavior can result in someone being ejected from a meeting and fined (following a properly noticed hearing).

NOT FOLLOWING
THE BYLAWS


QUESTION: We have a board that decided they wanted 2-year staggered terms. The bylaws established one-year terms. The board does not want to spend money amending their bylaws. Can they simply amend their election rules?

ANSWER: No, it requires a bylaw amendment. Two-year staggered terms are preferred because it provides continuity for boards. Simply changing election rules is not sufficient.
Except for the crazy SB 323 requirements, whenever there is a conflict between the bylaws and the election rules, the bylaws control. In a worst case scenario, a homeowner could sue the association in small claims court and have an election overturned if a board unilaterally adopts two-year terms.

RECOMMENDATION: With all the changes required by SB 323, now would be a good time to restate your bylaws.

HIRING LAWYERS


We are looking for experienced attorneys to join ADAMS|STIRLING.

Candidates should have at least five years' experience as an attorney.

We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.


Kudos #1. Thanks for your wonderful and informative newsletter. -Thom B.

Kudos #2. Thank you for the newsletter and for the tremendous effort invested in clarifying what the implementation of SB 323 will mean for all of us. -Denyse B.

Kudos #3. Thank you for all the newsletter information about legislative developments. -John W

Kudos #4. Your newsletter is quite informative and inspires a lot of inquiry. -Shelley G.

Kudos #5. Your website is so great! Thanks for all you do. -Victoria

*****

New Laws #1. As a board, how can we get information about pending legislation before it becomes law? -Laurel S.

RESPONSE: Well-informed board members are the best board members. The "new laws" section of our website tracks bills during each legislative session and our newsletter periodically provides updates on critical bills. My partner, Nate McGuire, is Chair of CAI-CLAC, which lobbies for common sense legislation and opposes bad legislation. CAI-CLAC provides regular updates via CLAC-TRAC E-News subscription. Their Hot Bills page issues "Calls to Action" for support on critical bills. You can also follow CAI-CLAC on Facebook, Twitter, and LinkedIn. Everyone needs to get involved if we hope to stop Marjorie Murray's destructive bills.

New Laws #2. The article on adding "veteran or military status" to the front of our CC&Rs didn't include the recent requirement to also add "victim of abuse status" which you mentioned in an earlier newsletter. Is this no longer required? -Sue O.

RESPONSE: Victim abuse status did not pass. I thought it had but was misinformed. So, the only change required on the cover page is to add “veteran or military status” to the list of things CC&Rs can’t discriminate against.

*****

Nightmare Bill #1. Could a member of the association be paid to serve as inspector of election? -Denyse B.

RESPONSE: There is nothing in SB 323 that prevents an association from paying a homeowner to be the inspector of elections. However, once paid, the homeowner is no longer a volunteer and would not be covered by the association's insurance in the event there is litigation over the election. If the association is going to pay someone to be an inspector, it should hire a company that handles elections professionally.

Nightmare Bill #2. Under the new law, can the management company do all the paperwork and mailings, and hire the inspector only for the tabulation? -James S.

RESPONSE: Management companies (under contract to manage the association) can facilitate an election under the direction of an independent inspector by sending out the notice of election, requesting nominations, sending out ballots and election rules, and receiving ballot envelopes addressed to the inspector.

Custody of Ballots. Per the statute, sealed ballots, signed voter envelopes, the voter list, proxies, and candidate registration list must be in the custody of the inspector or at a location designated by the inspector until after the tabulation of the vote, and until the time allowed for challenging the election has expired, at which time custody is transferred to the association.

Tabulating Votes. The only things a management company cannot do is verify signatures and count and tabulate votes. That must be done by independent third parties.


Nightmare Bill #3. When a resident does not follow our CC&Rs, should that individual be considered for a board position? What if they are delinquent in their assessments? -S. Cohen

RESPONSE: Marjorie Murray's CCHAL decided that scofflaws can serve on boards. If the person is delinquent in paying their assessments and has entered into a payment plan, they can serve on the board. Unfortunately, SB 323 does not require the delinquent owner abide by the payment plan, only that they entered into one. Once on the board, they can abandon the plan--another example of poor drafting by CCHAL. 


Nightmare Bill #4. Why just blame Senator Wieckowski for SB-323? Although he introduced it, a majority of legislators passed it, along with other ill-conceived and confusing legislation.

RESPONSE: Blame can be placed with Marjorie Murray's organization. They created this burdensome and poorly drafted bill and put it in Senator Wieckowski's hands and then convinced him it would somehow help homeowners. CCHAL is imposing its will on 9 million homeowners. A fundamental concept in the Declaration of Independence is seeking the consent of the governed. CCHAL did not seek the consent of homeowners when they cobbled together SB 323.


Nightmare Bill #5. Where does it say that if we want to be nominated we have to submit 200 words about our personal life, work, experience? Is this a normal practice? -Gina K.

RESPONSE: The provision is probably in your election rules. It is fairly common to allow candidates to write something about themselves. If you choose not to submit anything, election materials will simply list your name as a candidate and nothing more.

Nightmare Bill #6. What was the reason for only allowing 6,000-unit associations to use election by acclamation? There can't be very many HOAs that qualify. That smells like a back room special interest exemption for somebody. It's nuts. The HOAs that have the most trouble finding candidates are the smaller and medium size HOAs. An HOA with 6,000 units should not have any difficulty finding five people to serve on a board. -John W.

RESPONSE: You're right, it doesn't make any sense. All associations should be allowed to use election by acclamation when the number of candidates is less than or equal to the number of open seats. It avoids the unnecessary expense of mailing ballots, struggling to meet quorum, and then holding a meeting to open and count ballots when everyone already knows the outcome. Unfortunately, Marjorie Murray's organization is against simplifying elections and reducing expenses. For some reason, an exception was made for associations with at least 6,000-units.

*****

ADUs #1. You didn't answer the question posed last week by Gary S:

"When I bought a home in my association I agreed to the CC&Rs and rules in place at that time. If the state changes those rules doesn’t that invalidate the contractual obligations that I have to follow them? I didn’t agree to these changed rules at the time of purchase. I never would have bought my house under these rules. We are no longer in charge of our own investments." -Lisa B.


RESPONSE: The legislature routinely overrides HOA CC&Rs, as they did with SB 222, which invalidates any restrictions that discriminate against veterans or military status. However, the ADU law may fall into a different category because of its impact on property values. Some equate it to a "taking" of an owners' property values. Because of that, one association has expressed an interest in mounting a legal challenge, i.e., suing the State of California, to stop fundamentally changing the character of their association by forcing ADUs into their development.

As one attorney recently noted, the ADU law upends the entire CEQA process if a city originally approved a subdivision based in part upon a traffic study that the subdivision would add X vehicles to the adjacent roadways, and now every garage in the development could become a new residence with another vehicle. (CEQA is the California Environmental Quality Act, which requires agencies to identify the environmental impacts of their actions and to avoid or mitigate those impacts.)

Many agencies,
in conjunction with input from police and fire departments regarding emergency services, mandate that CC&Rs require garages be used for parking. If ADUs force vehicles onto streets plus increase the number of vehicles, it could impact emergency vehicle access to residences. The negative consequences of ADUs could be substantial.

ADUs #2. Our HOA is in an isolated area with its own water system that has limited water resources and has required members to reduce usage during the recent drought years. If additional units were built on individual lots, the demand would exceed the water company's ability to meet the demand. Are there any special considerations that allow us to limit ADUs? -Heidi C.

RESPONSE: If water is in limited supply, it could preclude the construction of ADUs in your community. You should raise this with your local agency so they don't issue ADU permits.

ADUs #3. I realize the ADU bill uses the term "planned development." Are you sure that CC&Rs saying our townhouse development is a condominium association controls? -Lissa C.

RESPONSE: Because the bill specifically references planned developments and and additionally refers to lots zoned for single-family residential use, condominium associations are safe. If your CC&Rs structured your townhouses as condominiums, the ADU bill does not apply. However, that will not stop owners from trying to convert their garages into ADUs, nor will it prevent a local agency from mistakenly issuing permits. Boards of directors of townhouse condominium associations will need to notify members they cannot convert their garages into ADUs, and then be vigilant to make sure no one tries to sneak one in.

ADUs #4. The senior mobile home park for which I work has a maximum 70% coverage of lot use requirement. Does this new law regarding ADUs override these restrictions? -Mary W.

RESPONSE: Yes, it does. In January, your should check with your local agency to see if they deem your park eligible for ADUs.

ADUs #5. We have a community of manufactured homes where each homeowner owns the land upon which their home sits, along with a interest in the common area. Insurance companies identify our community as a mobilehome park. Is the ADU law applicable to manufactured home communities? -Victoria

RESPONSE: The community you describe is a planned development, which means the ADU law applies. It doesn't matter what your insurance company calls you, it's the legal structure that matters. Unless your local agency decides differently, ADUs will be allowed in your community.

ADUs #6. We have a lift station that was designed to accommodate 124 single family homes, the number of homes in our development. Additional sewage would cause stress on our system and put it in jeopardy of failure. Can we deny ADUs because of this issue? -Myrna W.

RESPONSE: You should make sure your local agency knows about your sewage limitations so they don’t issue any ADU permits. Then, make sure your members know they cannot convert garages or build ADUs on their lots.

ADUs #7. I manage 5 mobile home parks, We have setback spacing for safety reasons due to combustible items. Will smaller ADU setbacks control? -Shelley G.

RESPONSE: Unfortunately, yes. The new ADU laws require local agencies to prepare relaxed regulations expediting the approval and construction of ADUs. It includes reduced setback requirements. Hopefully, your local building department will take safety into consideration and decide that ADUs cannot be built in your parks. Talk to them and make sure they know about your safety concerns.

*****

Day Care #1. This bill is also ill-conceived. It not only causes nuisance noise for the poor owners who have to live next to a family day care, it imposes excessive expense for water usage that all homeowners pay for, and excessive traffic coming into and out of the complex that is prohibited for other at-home businesses. Why aren't the HOA advocacy organizations looking out for our best interests? -Paul

RESPONSE: Some bills cannot be stopped. Legislators stampede to approve them because they think it supports the greater good, regardless of any negative consequences that result.

Day Care #2. I beg to differ with your characterization of the new law permitting an increase in the number of children permitted in daytime child care businesses in HOAs. You state that SB 234 “does some good.”

For whom? The business owner making money intruding on their neighbors with the noise and traffic from fourteen parents dropping off children in a neighborhood with 30 ft wide streets, no driveways and no parking spaces?

How on earth is it not a disruption of the enjoyment of my home to have 14 noisy toddlers running around the.backyard of a tiny lot (15 x 30) next door for 10 hours a day, 5 times a week only eight feet from my back door??

The limit on eight children was bad enough in my opinion but a necessary accommodation to the dismal state of affordable child care availability. Fourteen is too much. Twenty eight car trips a day to one unit? Yikes! -Michele J.

RESPONSE: You raise valid concerns. Unfortunately, the legislature seems to think they can keep piling more and more burdens on associations. At some point, people will decide they've had enough and move to surrounding states where they have some modicum of control over their property and lives. California is a poorly managed state. I don't see that changing any time soon.

*****

Defect Claims. Making it easier for HOAs to file construction defect lawsuits is just another barrier to creating new housing supply in California....just one more reason to think twice before moving forward with a housing project. -Scott M.

*****

Elevated Structures. You clarified in last newsletter only a condominium is affected by the new law requiring inspection of elevated structures. I live in an HOA with attached townhomes on individual lots. I am told by management that because our units are attached, the new law applies. Please confirm. -Lea B.

RESPONSE. If each townhouse is on its own lot, you are a planned development. That means balconies are not common area elements. Unless your governing documents state otherwise, each townhouse owner is responsible for maintaining, repairing and replacing his/her own balcony, which means SB 326 does not apply.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Additional Legislation

Nov 10, 2019 0 Views 0 Comments

Following are a few more pieces of legislation affecting California's associations.

Unlike the election bill pushed by the Center for California Homeowner Association Law (CCHAL), the following bills actually do some good. -Adrian

CONSTRUCTION DEFECT
CLAIMS MADE EASIER
 

To discourage construction defect claims against developers, many insert language in CC&Rs for new developments that require approval of the membership before any legal action can be filed. They hope that apathy and fear of litigation will block any such authorization.

Governor Newsom signed Senate Bill 326 giving boards of directors the authority to pursue construction defect claims without first going to the membership. In addition, any provisions in governing documents which restrict the board’s authority to retain legal counsel or incur expenses pursuing a construction defect claim are now unenforceable.

DISCRIMINATION AGAINST
MILITARY STATUS


Senate Bill 222 makes housing discrimination on the basis of veteran or military status against public policy. Associations must add to the first page of their CC&Rs the following stamp in at least 14-point boldface type:

“If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, veteran or military status, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.”
FAMILY
DAYCARE
Senate Bill 234 extends the protection that is already applicable to small family daycare homes (8 children) to large family daycare homes (14 children).
 
CC&Rs cannot restrict the use or occupancy of property as a family daycare home. This applies to condominiums and townhouses as well as single family detached homes.
 
A family daycare home is a facility that regularly provides care, protection, and supervision for 14 or fewer children, in the provider’s own home, for periods of less than 24 hours per day, while the parents or guardians are away.
 
HIRING LAWYERS

We are looking for experienced attorneys to join ADAMS|STIRLING.

Candidates should have at least five years' experience as an attorney.

We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.
 
7th ANNUAL
ABCs of HOAs
 
Adrian Adams will be speaking at an annual educational event open to all board members.
 
In addition to year-end legal updates by Adrian, Neda Nehouray will cover boards' management responsibilities and procedures, and Dr. Lori Baker-Schena will discuss ways for boards to strengthen leadership skills.
 
This free event by HOA Organizers will be held:
Date: Saturday, December 7, 2019
Time: 11 a.m. to 3:30 p.m.
Location: 11301 W. Olympic Blvd, Los Angeles

Kudos #1. Thank you for the hours spent trying to make clear the provisions in SB 323, which seem to be a step backwards for HOAs. These new laws add to the already high burden of our volunteers. -Netti J.

Kudos #2. Thank you so much! I just signed up for both electronic publications! I appreciate your help and support and will encourage my other board members to subscribe as well! -Renee J.

RESPONSE: We need to get the word out to as many homeowners as possible so we can mount letter writing campaigns and phone calls when Marjorie Murray floats her next bill. Encourage board members and owners to sign-up for our newsletter by entering their email address here.

 

ADU #1. I can’t believe they applied ADUs to associations! Our complex is going to look like a favela if everybody starts doing this. -Scott S.

RESPONSE: I had to look up favela. It means a Brazilian shack or shanty town; a slum. Assembly Bill 670 will clearly increase the density in associations. Let's hope it does not turn them into favelas.


ADU #2. Single family residential home tracts could jump 50% in population density. Where do the cars go? Argggggh. Wait until residents want to convert their parking spaces into residences. -Rick

RESPONSE: Let's not give legislators any ideas.


ADU #3. Could someone could put an ADU on their patio? -Dorethia M.

RESPONSE: Yes, that's possible. We will learn more once local agencies release their guidelines in January.

ADU #4. When I bought a home in my association I agreed to the CC&Rs and rules in place at that time. If the state changes those rules doesn’t that invalidate the contractual obligations that I have to follow them? I didn’t agree to these changed rules at the time of purchase. I never would have bought my house under these rules. We are no longer in charge of our own investments. -Gary S.

RESPONSE: Census data shows that more people are moving out of California than are moving in. With ADUs and SB 323, more people may be hitting the exits.

ADU #5. Can associations impose dues on ADUs? Planned communities should be able to charge renters the same association fee as all other dwellings. Even though dues are typically per lot, this needs to change and HOA dues should be charged per dwelling. -Steve C.

RESPONSE: I understand the need to address the increased burden ADUs will place on associations but you can't charge renters assessments. Your CC&Rs allow you to charge per lot, not per dwelling. However, you might be able to charge lot owners with ADUs an impact fee. (Watts v. Oak Shores.) You should run it by your association's legal counsel.

ADU #6. How will mobilehome and manufactured home communities be affected? Will they be required to allow ADU and JADU construction? -Marie W.

RESPONSE: No exception was made for mobile/manufactured home parks. If it's legally structured as a planned development and there is room on the lot for an ADU, it will apply.

ADU #7. Do age restrictions for 55+ developments apply to residents of ADUs? -John M.

RESPONSE: The legislation does not affect age restrictions. Your 55+ restrictions can be applied to residents of ADUs.

ADU #8. We have eight condos but we think they are townhouses. Is it possible for us to change our condos to townhouses? -Yvonne G.

RESPONSE: Townhouses are a form of construction and don't have anything to do with the legal structure of your association. Townhouses can be condominiums or single-family homes. You have to look to your CC&Rs to see how the developer structured ownership.

ADU #9. Can ADU guidelines be written into our operations procedures or must they be adapted into our CC&Rs? -John R.

RESPONSE: You don't need to amend your CC&Rs, guidelines can be added to your rules and regulations.

ADU #10. Our small HOA consists of 24 townhome style units (units share common side walls) with garages. We pay property taxes on our improvement (our individual units) and pay 1/24 of the taxes on the common area. Does the ADU law apply to us? -Debra G.

RESPONSE: You will need to look at your CC&Rs to see if you're legally structured as condominiums or a planned development. If you are condominiums, you're safe. If you are a planned development...

ADU #11. We have one homeowner who created an illegal JADU earlier this year. Will she still be required to provide the HOA with a copy of the lease showing an initial term of at least one year, tenant’s name(s) and contact information, etc. -Judy W.

RESPONSE: Yes, rental requirements such as you describe will apply to ADUs the same as other rentals. Owners will need to provide information about the renter and a copy of the lease to show that lease terms are longer than 30 days.

ADU #12. The real nightmare is homes & spaces that could be homes remaining empty for months until the fortunate owner spends some time enjoying their excessive home ownership. People need homes. People that have extra space need to realize their responsibility to the rest of humanity. -Trisha A.

RESPONSE: There are solutions other than ADUs imposed on associations. It's unfortunate the legislature didn't explore them.

ADU #13. What is an ARC document? I know bylaws, CC&Rs, and Rules and Regs. We are a small self-managed HOA. -Bob S.

RESPONSE: ARC stands for Architectural Review Committee. Some associations include architectural guidelines in their rules and regulations. Others, usually large associations, have a separate document for architectural guidelines.

ADU #14. Our CC&Rs state one residence per lot. Can we require that the primary residence be built before any ADU can be authorized? -Pam H.

RESPONSE: Probably not. The bill defined an ADU as an attached or detached residential dwelling unit located on a lot with a proposed or existing primary residence. It appears the owner of an empty lot can build a rental ADU on his/her lot without first building a primary residence.

 

*****
Elevated Structure Inspections. Does the inspection of balconies and other elevated structures apply to planned developments? -L.B.
 
RESPONSE: No, it only applies to condominiums.
 
*****

Nightmare Bill #1. In last week's newsletter, you wrote that term limits are no longer valid. Is there anything we can do to reinstate them?

RESPONSE: A strict reading of the statute knocks out term limits. Somebody needs to talk to Senator Wieckowski.


Marjorie Murray's Center for California Homeowner Association Law (CCHAL) voided everything that limits candidate nominations. Her organization then (i) mandated that candidates be an owner and (ii) gave associations their permission to adopt four specific qualifications. Since term limits prevent incumbent directors from being nominated, they will be unenforceable beginning January 1, 2020.

Nightmare Bill #2. What about 55+ communities where a 25-year old owns a unit via inheritance who cannot live in the unit due to age restrictions but wants to run for the board?

RESPONSE: Marjorie Murray's organization obviously did not think this through. Any requirements that board members in a 55+ community be at least 55 or live in the community are void on January 1, 2020. Senior communities can still enforce age restrictions on residents but not on board members.


Nightmare Bill #3. Everyone seems to have a different timeline for elections. Which one is right? -Mike K.

RESPONSE: I’m aware of four different timelines being circulated by law firms and management companies. The election requirements range from 105 days to 120 days. Marjorie Murray's bill is so badly drafted that no one can figure out how to comply with it. The fact that respected law firms arrive at different timelines does not bode well for associations struggling to comply with this deeply flawed legislation.


Nightmare Bill #4. I met with Sen. Wieckowski's office and they couldn't give me a straight answer regarding email privacy. I was told that the governor wants an additional bill addressing email early next year to make it so members would have to opt in, rather than opt out. -Rick S.

RESPONSE: Hopefully, Senator Wieckowski and Governor Newsom will do something to undo the chaos created by Marjorie Murray's bill. SB 323 needs to be repealed. At a bare minimum, it needs serious clean-up legislation.


Nightmare Bill #5. We adopted election rules that eliminate cumulative voting, quorum requirements, floor voting, and proxies, and allow for election by acclamation in uncontested elections. I see this mentioned for HOAs with 6,000 or more members. Does this mean we have to revert to secret ballots? If so, can we keep all the other options? -Netti J.

RESPONSE: In my opinion, your new provisions are valid. Voting by acclamation eliminates meaningless elections when the number of candidates is equal to or less than the number of open seats. Unfortunately, Marjorie Murray's organization blocked it a few years ago for HOAs but allowed it this year for associations with 6,000 or more members. Even so, I think voting by acclamation can be done if it is in your governing documents. However, there is a split in the legal community on the issue and boards should follow the advice of their legal counsel. See "Uncontested Elections."


Nightmare Bill #6. I'm still unclear about our management company's role in our elections. -R.A.

RESPONSE: Management companies can continue to be involved in elections, they just can't serve as inspectors of election.


Nightmare Bill #7. This legislation seems so ill conceived and irresponsible. Is is possible to create a court challenge on behalf of a large number of HOAs? -Jim P.

RESPONSE: The only litigation we are likely to see are more election challenges. The election timeline is absurd and associations will get tripped up by it. Senator Wieckowski is the one person who can clean up this mess. If enough people start knocking on his door, he might allow clean-up legislation.


Nightmare Bill #8. Regarding nominations from the floor, if a ballot is irrevocable once turned in, it rules out nominations from the floor. -Hank J.

RESPONSE: Nominations can still be made from floor and those who have not yet cast ballots can vote for floor nominees. However, as a practical matter, it makes floor nominations irrelevant.


Nightmare Bill #9. Does SB 323 apply to all HOA elections or just board member elections? -Hank J.

RESPONSE: It applies to all elections requiring secret ballots. As required by Civil Code §5100(a), the following matters must be voted by secret ballot:

  • special assessments over 5% and regular assessments over 20%,
  • election and removal of directors,
  • amendments to the governing documents, and
  • grant of exclusive use of common area property.


Nightmare Bill #10. The author of this abomination should be investigated. -H.J.

RESPONSE: It's sad that one person can cause this level of damage because she has the ear of one legislator.

NEW ELECTION
RULES


Election Rules. All associations must adopt new election rules. Any election conducted without new rules will be subject to legal challenge and may result in monetary penalties and an award of attorney fees.

CONTACT US if you would like us to prepare new election rules for your association.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Accessory Dwelling Units

Nov 3, 2019 0 Views 0 Comments

As reported in our October 13 newsletter, Governor Newsom signed Assembly Bill 670 authorizing accessory dwelling units. The Governor's goal is to create a large stock of low-income rentals throughout California as quickly as possible.

The companion legislation is extensive and will create significant challenges for planned developments when it goes into effect January 1, 2020. Following is a summary of key points.

Defined. An “Accessory Dwelling Unit” (ADU) means an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is situated.

A “Junior Accessory Dwelling Unit” (JADU) means a unit that is no more than 500 square feet in size and contained entirely within a single-family residence. A JADU can include separate sanitation facilities, or may share sanitation facilities with the existing structure.

Garage Conversions. The legislation authorizes garage and carport conversions into ADUs or JADUs (depending on size) that can be rented. This will impact parking in planned developments.

Parking. Most associations already have parking problems. ADUs will exacerbate the problem. Associations that require cars be parked in garages cannot use the requirement to stop garage conversions. The bill voids any restrictions that would prevent the construction of ADUs.

Rules Enforcement. Associations can continue to enforce garage parking requirements, but only against those who do not convert them into ADUs. This will create rules enforcement problems for associations. Owners will not take kindly that some must follow parking rules while others are exempt.

Two Per Lot. The bill allows one accessory dwelling unit and one junior accessory dwelling unit per lot. That means owners can convert their garage into a JADU and build an ADU in their backyard.

Expedited Approvals. The bill expedites the approval process. Local agencies will be required to process applications within 60 days of their submission. Some applications can receive ministerial approval. That means they can be approved without a hearing notwithstanding any local ordinance regulating the issuance of variances or special use permits.

Fees Limited. In addition to streamlining applications, permit fees will be limited. Agencies cannot treat ADUs as a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service, nor can they require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge.

Increased Parking. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit or converted to an accessory dwelling unit, local agencies cannot require that those off-street parking spaces be replaced. In other words, parking is pushed to the streets. In addition, if owners want to create parking additional on their lots, the bill allows for parking in setback areas. That means more vehicles can be parked on a lot and parked closer to neighboring houses.
 
Setback Requirements. Association setback requirements that would prevent the construction of backyard ADUs will be voided. Setbacks will be reduced to "no more than four feet from the side and rear lot lines."
 
View Restrictions. The bill does not address view restrictions. Can an association block the construction of ADUs that violate view restrictions? The bill's broad language striking down any restrictions that prevent the construction of ADUs arguably includes view restrictions. Litigation will likely erupt over this issue.
 
Owner Occupancy. The bill allows local agencies to impose a requirement that an owner occupy either the primary dwelling or the ADU. Accordingly, associations should be able to adopt the restriction as well.
 
Rental Period. The bill allows local agencies to impose a restriction that ADUs be rented for terms longer than 30 days. That means associations should include ADU rental restrictions in their rules even if no such restriction is found in their CC&Rs.
 
Property Values. Higher density created by ADUs means additional vehicles on streets. In addition to parking problems and rules enforcement issues, the influx of ADU renters will burden amenities such as pools, clubhouses, tennis courts, etc. This could change neighborhood aesthetics and could drive down property values.
 
RECOMMENDATION: Association boards should talk to legal counsel about adopting policies and procedures for ADUs and JADUs. Contact us for assistance.
 
*****
Following are questions we started receiving about ADUs:
 

ADU #1. Does the ADU bill apply to Indian owned land? -Al H.

RESPONSE: It depends on where it's located. As U.S. citizens, American Indians are generally subject to federal, state, and local laws. On federal Indian reservations, however, only federal and tribal laws apply to members of the tribe, unless Congress provides otherwise. Accordingly, if a common interest development is built on Indian owned land outside of a reservation, the ADU bill would apply. If the development is inside the reservation, it would not apply.

ADU #2. What are the steps in preparing guidelines to revise our architectural guidelines to regulate ADUs in our HOA? -John R.

RESPONSE: The bill allows associations to adopt restrictions so long as they do not unreasonably increase the cost of ADUs. Your board will need to work with legal counsel to prepare ADU rules and then go through the normal procedure for adopting rules.

ADU #3. I'm not clear from your last newsletter if this law (allowing ADU structures in back yards & converting garages to ADUs) applies to condominium complexes, too, or just single family homes & townhomes. -R.R.

RESPONSE: Condominiums are not affected. The statute specifically references planned developments. Townhouse construction where owners own their structure and the lot it sits on, will be affected if they have garages.

ADU #4. I’d appreciate your latest info regarding ADU guidelines as mentioned in your newsletter. We just revised our ARC documents allowing for HOA exemption from this disastrous change. Ouch!! -Arthur S.

RESPONSE: Law firms are studying the legislation so they can assist their clients in how best to implement the law. Our firm is preparing ADU guidelines. You can contact us for more information.

 
More Problems Identified. Further analysis of SB 323 has revealed additional problems. Hopefully, this is the last of the difficulties.
 
   A.  Deadline for Adoption of Election Rules. The original election law in 2005 provided time for associations to adopt election rules--it gave them until July 1 of the following year. CCHAL did not provide any such buffer.
 
Their law goes into effect January 1, 2020. That has law firms and boards across the state scrambling and will put many associations in violation because there is not enough time to get amendments in place for elections in January, February, March and April.
 
Bylaws. Associations with an election in the first quarter of 2020 cannot possibly amend their bylaws in time to incorporate the burdensome requirements imposed by CCHAL. That means associations will need to amend their election rules without any corresponding changes in their bylaws, thereby creating a conflict between their bylaws and their election rules.
 
Election Rules. With the 90-day restriction on election amendments, associations with elections in the first quarter of 2020 must either (i) amend their election rules in violation of the 90-day restriction or (ii) hold their elections under existing rules in violation of CCHAL's election requirements. Either approach creates the potential for legal challenge by disaffected homeowners.
 
Election Timeline. CCHAL's extended election timeline is difficult to parse. As a result, there are at least three different versions of the timeline being circulated. No one knows for sure which one is fully compliant with the new requirements. It would be nice if Marjorie Murray and Senator Wieckowski published a definitive timeline so associations could avoid getting sued.
 
    B.  90-Day Amendment Restriction. Election rules adopted cannot be amended less than 90 days prior to an election. (Civ. Code §5105(h).) Unfortunately, the bill did not define the starting point of an election. Is it the appointment of an inspector of elections, the call for nominations, the counting of ballots, or something else? It creates another opportunity for legal challenges if a disgruntled homeowner disagrees with the board's selection of a starting point for the 90-day amendment restriction.
 
    C.  Hierarchy of Documents. SB 323 turned the hierarchy of documents on its head. Civil Code §4205 establishes a hierarchy of authority so boards of directors and courts can determine which documents control whenever there is a conflict between them. The hierarchy is as follows:

    1. Law
    2. CC&Rs
    3. Articles of Incorporation
    4. Bylaws
    5. Rules

CCHAL's legislation creates new election requirements that must be incorporated into election rules in all of California's 55,000 residential and mixed-use associations. Those requirements prevail notwithstanding anything to the contrary in their CC&Rs or bylaws. That means election rules are now in the #2 position whenever there is a conflict between amended election rules and any other governing document.
 
   D.  Term Limits. CCHAL may have intentionally or unintentionally voided term limits. If associations cannot establish any nomination qualifications except those allowed by Marjorie Murray's organization, that means term limits are voided since they prevent members from being nominated.
 
   E.  Recall Elections. The conflict between CCHAL's extended election timeline and the Corporation's Code we identified in last week's newsletter may require changes in how recall elections are handled. Since elections will now last approximately 105 days, the 90-day timeline for recall elections required by the Corporations Code are in conflict.
 
This can be dealt with by holding two elections--a 90-day recall election followed by a separate 105-day election (assuming the recall is successful). That means recalled directors remain in place until the association goes through a CCHAL election. The second approach is to decide that election rules override the Corporations Code and hold the recall and director election simultaneously using the new 105-day timeline. It's one more detail for law firms to sort out when amending election rules and bylaws.
 
   F.  Costs Levied by a Third Party. Another example of poor drafting is a new provision by CCHAL that candidates cannot be disqualified for nonpayment of costs levied by a third party. There is a great deal of speculation as to its meaning since third parties don't levy costs via associations. They levy their costs independently. If anyone happens to attend one of Marjorie Murray's classes on how to sue associations, they can ask her what it means and then let us know.
*****
As with our last two newsletters, there were too many emails to print. Many were edited to make them shorter. Following is a sampling:
 

Nightmare Bill #1. Someone should investigate why Marjorie Murray never registered as a lobbyist. You can get the Center for California Homeowner Association Law's IRS form 999 showing a "loan" to her, putting Marjorie Murray in violation of applicable lobbying laws. -Anonymous

RESPONSE: If Marjorie Murray is not registered, she must be operating under a loophole.


Nightmare Bill #2. Here is an email address I have for Marjorie Murray: [email protected]. Hope this helps! -S.S.

Nightmare Bill #3. Regarding CCHAL, how is it funded? Regarding Senator Wieckowski, where is he from and how does he benefit by creating unnecessary laws? -Jim K.

RESPONSE: I've been told that CCHAL is funded by plaintiffs' lawyers (hence the classes on how to sue associations). Unfortunately, I have not been able to verify their source of funding. As for Sen. Wieckowski, his website states he is a Democrat from Fremont representing a portion of San Francisco's East Bay. His alignment with CCHAL is a mystery. His bill harms over 9 million Californians. I don't see how that helps him politically.


Nightmare Bill #4. What about electronic voting? Is it not allowed in California? -Brad S.

RESPONSE: Corporations throughout California can use electronic voting--except if the corporation is a homeowners association. Marjorie Murray's organization helped kill legislation that would have allowed electronic voting.


Nightmare Bill #5. What is a voluntary non-CID association? -Jairo A.

RESPONSE: Before developers fully understood how to create homeowner associations, they created deed restricted developments. Typically, the restrictions protected views and the architectural integrity of the development. They didn't create an association to enforce the restrictions because they didn't know how. As a result, enforcement was left to individual owners. It had the effect of pitting one homeowner against another. As a result, homeowners would get together and form a voluntary association with voluntary dues. Because everything is voluntary, dues are quite small and voluntary associations have difficulty enforcing restrictions because legal expenses often outstrip their budgets.


Nightmare Bill #6. Do you represent homeowners against their associations? -Glori

RESPONSE: No, to avoid potential conflicts of interest, we do not represent individual board members, homeowners, management companies, or vendors. We only serve as corporate counsel to associations. There are a number of fine lawyers in practice who represent homeowners against their associations.


Nightmare Bill #7. Can SB 323 be repealed? -Susan E.

RESPONSE: That's unlikely. Homeowners throughout California fought the bill by writing letters, making phone calls, and visiting their legislators. Unfortunately, Marjorie Murray's organization and Senator Wieckowski were able to push through the legislation.


Nightmare Bill #8. We are a small HOA. Our annual meeting will be 1/15/20. Are we supposed to completely redo our process and not have our annual meeting until sometime in April (based on the new timeline?) -Myrna W.

RESPONSE: Existing election laws are valid through January 1, 2020. Currently, you can operate under them and send out notices and ballots. To be safe, you should appoint an independent election inspector to act as an inspector and hold your election January 15 (and hope no one sues over real or imagined violations under CCHAL's new timeline). Your other option is to push your election into the second quarter of next year while you amend your documents and adopt the new election timeline.


Nightmare Bill #9. We are a small (31-unit) self-managed condo association. Our total income proposed for 2020 is $66,960. Hard to imagine how the expenses required by this bill will impact our association. Am I right in assuming that this total pain bill applies to us also? -Mary C.

RESPONSE: Sadly, yes. Marjorie Murray's organization did not make any exceptions for small associations. Their burdensome requirements apply to a 5-unit association the same as a 5,000-unit association.


Nightmare Bill #10. We are an association of cabin owners formed in 1981, each with a 1/26th share of 8+ acres. We have bylaws but not CC&Rs. We have been told that we are not a CID but TIC and therefore do not need to follow Davis-Stirling or any of the rules related to such (no open meetings, annual mailings, reserves, budgets or election rules). As secretary, I am skeptical. Is this advice correct? -Lesley M.

RESPONSE: From your description, it sounds like you are a CID. Unlike stock cooperatives where a corporation owns the entire project and shareholders are given an exclusive right to lease a unit, a TIC (also known as a "community apartment project" or "own-your-owns") is a development where members own the entire project as tenants in common (TIC) and are given the exclusive right to lease a unit (in your case, a cabin). This form of legal structure is one of the four recognized under the Davis-Stirling Act as a common interest development subject to the Act. (Civ. Code §4105) You should have legal counsel review your governing documents.


Nightmare Bill #11. I see nothing in the CC&Rs that prohibits a member obtaining a new ballot and changing his vote, prior to the votes being counted for a board election. Since we can nominate someone from the floor the day of the election, or if we learn something new about a candidate, how is this possible? Our management company says it is not allowed. Could you please site any code that addresses this? -Mary B.

RESPONSE: Your management company is correct. Once a secret ballot is received by the inspector of elections, it is irrevocable per Civil Code §5120(a).


Nightmare Bill #12. I no longer live in California having had the good sense to move four years ago. I sincerely pray Idaho will be a place where there is more common sense in government. -Sandy B.

RESPONSE: At the moment, common sense is in short supply in California. Let's hope the malady does not spread to surrounding states.


Nightmare Bill #13. This new law (SB 323) is insane. I’ve just been made aware that it is in direct conflict with the California Data Protection Act, which goes into effect on January 1. From what I’m being told, one act says you have to protect the integrity of information under your control, and the other says you have to give it to any member who requests it. Any idea how to comply with both laws? -Shannon M.

RESPONSE: SB 323 is one of the worst bills in memory. It's excessive in its reach and poorly drafted. I will have to look into the Data Protection Act to see how the two interact.


Nightmare Bill #14. If Governor Brown vetoed this awful legislation last year, why did Newsom sign it this year? What’s his beef (or ineptitude) with HOAs? -Ken M.

RESPONSE: Good question.


Nightmare Bill #15. My board of directors is confused as to all the ramifications of this legislation and would like to get a general understanding of what they are facing prior to paying for legal advice.  -Mike S.

RESPONSE: Right now, lawyers are working overtime trying to untangle the bill and draft new election rules. Your board shouldn't try to understand what you're facing--it would make your head hurt. Instead, authorize legal counsel to prepare new election rules and increase your annual budget for legal fees.


Nightmare Bill #16. Can small associations still conduct verbal elections during our annual meetings? We consist of only 8 units. -Patrice L.

RESPONSE: No, they can't. However, I suspect many small associations will ignore SB 323 and operate informally as your association does.


Nightmare Bill #17. What exactly can management companies legally do to facilitate an election? -Debra D.

RESPONSE: Under the direction of an independent election inspector, management can send ballots, collect ballots, count ballots, open ballots, and tally votes.


Nightmare Bill #18. Can a member of our management company, who serves a different association, miles away, and has NOTHING to do with our association be an inspector for our election? -Frank M.

RESPONSE: No, that won't work. The person is an employee of the management company under contract to your association. You will need to appoint a homeowner to act as your inspector or hire someone to handle the election. That person can then use your management company to assist with the election.

NEW ELECTION
RULES


Election Rules. All associations must adopt new election rules. Any election conducted without new rules will be subject to legal challenge and may result in monetary penalties and an award of attorney fees.

CONTACT US if you would like us to prepare new election rules for your association.

HIRING LAWYERS


We are looking for experienced attorneys to join our firm.

Candidates should have at least five years' experience as an attorney.

We offer growth opportunities and excellent benefits. Contact me at 800-464-2817 or by email.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Analysis of SB 323

Oct 21, 2019 0 Views 0 Comments
We were swamped with feedback on the signing of Senate Bill 323 by Governor Newsom. Readers had a lot to say about the bill pushed by the Center for California Homeowner Association Law (CCHAL).
 
In addition, attorneys from around the state discussed internal problems in the poorly drafted bill. Following are some of the complications already identified:
 
Email Privacy. Associations who currently have a list of member emails must now add those emails to the membership list and make them available to any member who asks for them. Even if members intended their email addresses for HOA communications only, CCHAL has made them public. 
 
Most members will not want email address made public. To avoid this, associations need to either (i) purge their existing email list or (ii) send everyone a form allowing them to opt out of the membership list. This needs to be completed before January 1, 2020.
 
RECOMMENDATION: Boards should alert their membership of the pending disclosure and their ability to opt out. Opting out can be done via email.
 
Email Opt Out Problems. Because of poor drafting, SB 323 allows members to opt out in one provision but failed to allow for it in a second provision referenced by the first. New language in Civil Code §5200 defines "Association records" to include Membership lists with email addresses. It allows members to opt out of the membership list pursuant to Civil Code §5220. Unfortunately, Section 5220 does not include email addresses.

A strict reading means members can opt out of everything except sharing their email addresses. I prefer to read 5200 as the authorizing statute so any opt out includes email addresses.Unfortunately, CCHAL opened the door to legal challenges.
 
RECOMMENDATION: Boards should follow the advice of their their legal counsel on how best to handle this situation.
 
Election Confusion. Section 5100 of the Civil Code was amended to require the inspector of elections to deliver to the membership ballots and a copy of the election rules at least 30 days before an election. Section 5115 overlaps duties by making the association responsible for giving notice of the election and for distributing ballots.
 
RECOMMENDATION: Duplicative mailings by the association and the inspector will be costly and confusing. To avoid this problem, one of the parties should delegate to the other the duty of mailing everything. The board should delegate the task to the election inspector or vice versa.
 
Who Can Be An Inspector? Under existing election laws, an association can use their management company or their CPA to handle the election. More often than not, it saved money. That is no longer allowed. Starting January 1, "An independent third party may not be a person, business entity, or subdivision of a business entity who is currently employed or under contract to the association for any compensable services other than serving as an inspector of elections."
 
This will likely cost more since management companies and independent inspectors will need to both be involved preparing election materials. Their will be some duplication of effort. It makes elections more expensive, not less.
 
Volunteer Inspectors. Boards can avoid some expenses by selecting homeowners to be inspectors of election. Unfortunately, inspector duties have increased, which means the risk of error has also increased. If lawsuits are filed, the inspector will undoubtedly be named.
 
If sued, will the inspector be covered by the association's D&O insurance? That may depend on the particular association's insurance policy.
 
RECOMMENDATION: Before appointing homeowners as inspectors of election, boards should make sure they are protected under the association's D&O insurance.
 
Incentives Removed. Under SB 323, no one's voting rights can ever be suspended. An owner can be six months delinquent, ignore the association's rules, have numerous unpaid fines and still vote. Suspension has been an incentive to pay assessments and comply with the association's governing documents. CCHAL took away the incentive.
 
Non-Owner Directors. CCHAL also took away the right of associations to decide for themselves if they want to elect non-owners to their boards. This is a blow to small associations who may want qualified non-owners on their boards. CCHAL's hostility toward tenants is inexplicable. Fortunately, the bill does not prevent boards from appointing tenants to their boards. They just can't be elected.
 
RECOMMENDATION: Have legal counsel review the appointment provision in an association's bylaws to make sure there are no barriers to such appointments.
 
Director Qualifications. Poor drafting created another anomaly. Changes to election requirements provide a handful of mandatory and permissive disqualifications but does not clearly limit associations to those disqualifications. For example, associations are required to disqualify nonmembers from nomination and are allowed by CCHAL to disqualify co-owners, those who have owned for less than a year, delinquent owners, and persons with a criminal conviction that would prevent the association from obtaining a fidelity bond. 
 
The bill seems to imply that no other disqualifying provisions can be used but it does not actually say it.
 
Some believe all existing director qualifications in an association's bylaws will continue to be valid after January 1, 2020. I don't believe that was CCHAL's intent but who knows? (It appears CCHAL's real intent was to create full employment for lawyers.)
 
RECOMMENDATION: Boards should consult legal counsel.
 
Removal of Directors? CCHAL created yet another anomaly. It did not address director removal provisions. That means a member not in good standing could be elected to the board but, once elected, could be removed from the board because the director was (i) not in good standing, (ii) suing the association, (iii) missed three consecutive meetings, (iv) is a registered sex offender, etc.
 
As long as the removal provisions are not worded as a qualifications, they are still valid.
 
RECOMMENDATION: Associations will need to talk to legal counsel about how best to handle this situation. (More employment for lawyers.)
 
New Timeline. The election timeline is now longer. Associations need to sequence their elections as follows (if I missed anything, please let me know):

ANNUAL MEETING TIMELINE

1. At Least 90 Days Prior to the Annual Meeting: Select 1 or 3 inspector(s) of elections and set a date for the annual meeting.

2. At Least 90 Days Prior to the Annual Meeting: Give notice of the election procedure and the deadline for submitting nominations and where to submit nominations.

3. At Least 30 Days Before Ballots Are Distributed: Prepare a candidate registration list and a voter list. The voter list must include each voter's name, voting power and the physical address of the voter's separate interest, parcel number, or both. The mailing address for the ballot must be listed on the voter list if it differs from the physical address of the voter’s separate interest or if only the parcel number is used.

4. At Least 30 Days Before Ballots Are Distributed: Allow members to verify the accuracy of their individual information on the candidate registration list and voter list.

5. At Least 30 Days Before Ballots Are Distributed: Give notice of (i) the date/time/address to return ballots, (ii) the date/time/location of the meeting, and (iii) the list of candidates.

6. At Least 30 Days Prior to the Annual Meeting: The inspector must deliver, or cause to be delivered ballots and a copy of the election rules.

RECOMMENDATION: Management companies and inspectors of election should work out a timeline sequence of events necessary to comply with all the new requirements.

Higher Costs and Litigation Exposure. The legislation is a mess. Associations will incur legal fees, pay more for elections, and have greater exposure to litigation. The bill is like lipstick on a pig--it's ugly.
 
RECOMMENDATION: At a minimum, every association will need to work with legal counsel to amend/restate their election rules. Amending bylaws is discretionary. At some point, boards should amend their bylaws to eliminate invalid provisions. We will be sending a package to our clients with recommended changes and pricing. If you would like a proposal, contact us.


The legislation sponsored by CCHAL generated more emails than I can print. Following is a sampling:

Nightmare Bill #1. NOOOOO!!!!!!!!!!!!!! -Jamie H.

Nightmare Bill #2. Wow what a nightmare! Is there an appeal option to this disaster? -Dino D.

RESPONSE: No, there is no appeal. Someone would have to float a new bill next year to undo the mess created by SB 323. Having just voted it through, it's unlikely the legislature or the governor would reverse direction.


Nightmare Bill #3. Is there a way associations can fight this? -Laurel S.

RESPONSE: See below.


Nightmare Bill #4. If there are 55,000 HOAs in the state, we should be able to get at least 50,000 signatures on a Newsom recall petition. Lets get this rolling! -Robert M.

RESPONSE: I was surprised to discover there are already two petitions to recall the Governor for his mismanagement of the state. See Petition #1 and Petition #2.

Nightmare Bill #5. I have not only signed the recall Newsom petition, I signed up to donate a hundred a month to the campaign. -Anonymous

RESPONSE: I'm not advocating a recall but it would interesting if it actually happened. Legislators and governors might leave associations alone for an election cycle or two.

Nightmare Bill #6. I am all for SB 323! It benefits members! -Kathy M.

RESPONSE: I suspect you have not read the bill. It takes away homeowner rights and takes money out of their pockets. Every association in California will have to rewrite their documents. It will be costly for HOAs, lengthen elections, and create more exposure to litigation.
None of this benefits members.

Nightmare Bill #7. Gov. Newsom should leave us alone and work on the homeless problems. He is trying to solve a non-problem instead of looking at real problems. -Finn M.


Nightmare Bill #8. What happens if an association does not comply and make these updates immediately? This will hurt very small and poor associations such as ours. -Christine K.

RESPONSE: If an association conducts elections without election rules or does so with nonconforming rules, members can challenge and possibly void the election and be awarded a fine of $500 plus attorneys fees. (Civ. Code §5145.)

Nightmare Bill #9. Our association was in the process of amending our bylaws. Now that SB 323 has passed are we required to include it? -Jim M.

RESPONSE: If you are in the drafting phase, you should include SB 323. If your bylaws are currently out for a vote, you can either pull them back and revise them or let the voting continue. It's a business decision for the board to make. Talk to your legal counsel and see if he/she thinks revisions can be made without taking the document back out for a vote.


Nightmare Bill #10. Does that mean an owner can violate all our rules, refuse to comply, refuse to pay fines, and still run for the board? We can't disqualify them? -Don R.

RESPONSE: That is exactly what it means. You can no longer disqualify scofflaws. They can occupy a seat on the board.


Nightmare Bill #11. I am the president of 496 condos. I have a personal list of email addresses about 240 owners and tenants, people who I send an advance copy of the newsletter, alerts for coyotes, community events and warnings. I blind copy all emails for privacy. Would those have to be shared? When they gave them to me, it was with the understanding of anonymity. -Sharlene D.

RESPONSE: If the email list is your personal list, it does not have to be shared. If the list is used by the board to transmit official communications from the board to the membership, it would be deemed a record of the association and would have to be shared with any member who requested it.

Nightmare Bill #12. Does SB 323 allow our signatures to be copied? -Susan R.

RESPONSE: At one point it did. SB 323 was subsequently amended so "Signed voter envelopes may be inspected but may not be copied."


Nightmare Bill #13. Does this apply to commercial associations or just residential? -Jeff L.

RESPONSE: Only residential associations have to suffer under this legislation.


Nightmare Bill #14. My board is asking if this new law is going to affect their upcoming annual election scheduled in January 2020. -Marti M.

RESPONSE: Not every agrees on this issue. Until January 1, 2020, your association's existing bylaws and election rules are still valid and applicable. That means the appointment of a manager as your inspector for the January election is currently valid. Starting January 1, you cannot appoint your manager to be an inspector. However, if he/she was validly appointed in October/November, the appointment may be valid for your January election. The more conservative approach is to hire an independent inspector.


Nightmare Bill #15. I see SB 323 as a good thing. Many people in my association believe the management company is corrupt and this is a good way of showing the truth. -Ted S.

RESPONSE: I don't see how taking away homeowner rights and increasing the cost of elections exposes corruption in a management company.


Nightmare Bill #16. It’s so depressing what is happening to California. -Marilyn B.

Nightmare Bill #17. Thank you for the update on SB 323. Could you clarify the restriction to being on a board with joint owners. Does this imply that an owner who is one of three persons on title is not eligible as a board member? -Frank G.

RESPONSE: If there are three of you on title, only one can be elected to the board. This is often practiced by larger associations but not small ones. Large associations have a large pool of volunteers to draw from. Small associations don't have that luxury and need the flexibility to elect co-owners to the board. You are not required to including this in your election rules--it's discretionary.

*****

Still Ringing. How is it that I only just now notice that your mail comes from ADAMS | STILRING after enjoying your emails for several years? Has your great humor infiltrated the From line or is it an error on my part. Faithful reader. -Helga L.

RESPONSE: It's so close to Halloween that Gremlins are on the loose. I found one changing names and dates in my newsletter. Fortunately, I caught him before he could do any real damage. I put him in a box and shipped him to the legislature where he could be more productive.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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