Adams|Stirling is deeply saddened by the tragic losses from California's wildfires. They have had a devastating impact on families and communities, including many of our clients.
Notify Insurance. Managers, boards of directors, and residents should immediately put their respective insurance carriers on notice of any damage from fire, smoke/soot, water (from fire hoses), and air-dropped fire suppressants. Make sure you document all losses with photographs and keep receipts of expenses incurred.
Follow Up. If you notify your insurance broker by phone, make sure to follow up in writing with an email or letter. If you don't get an acknowledgement, follow-up again to make sure your claim is being processed and an adjuster has been assigned. Because of the large number of fire-related claims that will be filed, any delay in filing your claims could result in significant delays in processing them.
Notify Counsel. Associations should notify legal counsel of any losses suffered so they can provide advice on insurance claims, issues involving possible looting, security, clean-up, and reconstruction. Legal counsel can also assist in the event a carrier is slow to respond or, worse, denies coverage. If you need our assistance, please call (800) 464-2817.
QUESTION: If an association's CC&Rs state a maximum annual assessment increase of 10%, can the board raise assessments 20% based on the Davis-Stirling Act?
ANSWER: Yes, it can. Regardless of any contrary provisions in your CC&Rs, the board can raise regular assessments up to 20% without membership approval. This is one instance where the Davis-Stirling Act specifically overrides governing documents.
Calculation. The 20% increase is based on the association’s regular assessments for the prior year, including operations and reserve contributions.
Timing of Increase. Assessment increases are conditioned on timely distribution of a budget report, which must be distributed 30-90 days prior to the end of the association’s fiscal year. Failure to meet this requirement nullifies any increase levied by the board, which then requires membership approval.
Duty to Assess. By statute, boards are required to levy assessments sufficient to perform their duties. (Civ. Code §5600.) The legal duty falls on board members, not the membership. That explains why boards sometimes raise dues when they would rather not, and why they don't seek membership approval unless the increase exceeds 20%.
Thank you to my partner Nathan McGuire for answering this question.
KATHY MILLS JOINS
I am pleased to announce Kathy Mills has joined our San Diego office.
Community Associations. Prior to joining our firm, Kathy spent many years representing community associations, advising boards of directors, amending and restating governing documents, reviewing and negotiating contracts, providing legal opinions, and litigating matters.
CID Development. In addition to HOA experience, Ms. Mills has valuable experience counseling developers on the Subdivision Map Act, the SB 800 construction defect process, the Real Estate Settlement Procedures Act, and the Interstate Land Sales Act. She assisted with project planning, securing public reports from the DRE, and obtaining approval of subdivision documents from city/county planning departments for condominium, single family, highrise, mixed-use, master planned communities, and condo conversions.
Education. Kathy received her BA, magna cum laude, from Washington & Jefferson College in Washington, Pennsylvania where she was Phi Beta Kappa with a double major in Economics & Political Science. Kathy went on to earn a Juris Doctorate from the Penn State Dickinson School of Law, in Carlisle, Pennsylvania.
We are delighted to have such an experienced attorney join our San Diego legal team. If your association needs legal services, contact us for a proposal.
I am also delighted to announce Alison Greiner has joined our firm's Temecula office and will work with our growing base of San Diego and Inland Empire clients.
Experience. Alison is a 15-year attorney who brings valuable experience representing clients in various areas of the law, including corporate formation and transactions, premises liability, contracts, real estate transactions, human resource issues, workers' compensation, personal injury, litigation and dispute resolution.
Education. Alison earned a BA in Communications with an emphasis in Public Relations from San Diego State University. This was followed by a Juris Doctorate from the University of San Diego School of Law.
Alison is a wonderful addition to our San Diego/Inland Empire team. If your association needs legal services, contact us for a proposal.
ABCs of HOAs
I will be speaking at an event in Los Angeles hosted by HOA Organizers, Inc.
It is a free event with a catered lunch and raffle prizes where board members can learn, interact, and meet with industry professionals.
Program. I will speak on new laws affecting associations and boards of directors. Neda Nehouray (HOA Organizers) will speak on board management responsibilities and procedures. Dr. Lori Baker-Schena (Baker Schena Communications) will speak on how boards can strengthen their leadership skills and enhance performance.
There will be a Q&A to allow attendees to address specific inquiries to the panel.
When: Saturday, December 8 from 11AM to 3:30 p.m.
Where: Olympic Collection, 11301 W. Olympic Blvd., L.A.
RSVP: [email protected] or (818) 778-3331 x509
HIGHRISE MANAGER LUNCHEON
Wednesday, December 12, is the 25th anniversary of our annual highrise managers' luncheon.
This is exclusive to onsite highrise managers.
We will greet old friends and meet new ones, review 2018 changes in the law, pass out cool swag and prizes, and eat good food.
Fraud Insurance. "Computer and Electronic Transfers Fraud" (C&ET Fraud) coverage can be added as a sub-limit under the HOA’s crime policy. Some carriers offer as little as $10,000 for C&ET Fraud and some can only insure up to $750,000. These limits do not need to match the total crime limits.
The language in the bill does not specify an actual limit. It states, “The association’s fidelity bond shall also include computer fraud and funds transfer fraud.” If an HOA carries a $1,000,000 Crime policy, are they required to carry $1,000,000 in Computer and Electronic Transfers Fraud? Or can they carry a significantly smaller sub-limit and still be in compliance? I know what the safe answer is but the reality is the difference in premium could be substantial. -Pat L.
RESPONSE: You are right, the bill does not specify an actual limit for C&ET Fraud insurance. It is implied--reserves plus three months of assessments. (Assembly Bill 2912.) In my opinion, the C&ET Fraud policy and crime policy can each be different amounts so long as each meets or exceeds reserves plus three months of assessments.
Kudos. Your newsletter ROCKS! Bet you knew that already! -Lisa I.
Manager/President. Regarding the manager acting as president of the board (“The manager refuses to allow us to have a president claiming we would be sued. To compensate, the manager has taken over the president's powers.”) Obviously we only know one side of the situation, but as a manager, I can’t think of any circumstance where that would be appropriate. Final recommendation, fire the manager and hire someone who won’t overstep their position.” -Lisa H.
RESPONSE: If the manager is truly dispensing legal advice (practicing law without a license), refusing to allow the board to appoint a president, and taking over the president's powers, he/she has significantly overstepped boundaries and the board needs proper legal advice on pending matters. They also need to reign in the manager.
Meeting Quorum. In the Feedback section, did the board cancel the election because there wasn’t quorum or did they cancel the annual meeting because there wasn’t quorum? And, follow up, if the meeting requires quorum, but the election doesn’t, can you hold the election without the meeting? -Lisa H.
RESPONSE: It appears the meeting was canceled for lack of quorum. However, the purpose of an annual meeting is to elect directors and if no quorum is needed to elect directors, the meeting should not have been canceled. Opening and counting ballots could (and should) have been done at the annual meeting so attendees could observe the opening of ballots and tabulating of votes.
Boards can contact us for friendly, professional advice.
Adrian J. Adams, Esq.
Founder & Managing Partner