Suspending Voting Rights

Jul 22, 2018 0 Views 0 Comments

QUESTION: Our governing documents give the board authority to suspend members’ voting rights when they are delinquent. If a member who owns more than one separate interest is delinquent on only one unit, can the suspension globally apply to all votes that member has? Sometimes even one or two votes can make a difference.

ANSWER: I don't believe global suspension of voting rights is allowed. Typically, an association's bylaws tie voting rights to ownership interests and state that each member gets one vote for each condominium or home owned. Voting rights can then only be suspended for the unit that is delinquent.

Due Process: Before suspending a member’s voting rights, he or she must be given at least 15-day's notice in advance of the intent to suspend privileges (Corp. Code §7341(d).) and given an opportunity to be heard by the board before any suspension can be imposed. This procedure is known as “Due Process.”

How Long Can the Suspension Last? Suspension of voting rights is normally tied to delinquency, not a rules violation. Generally, the suspension will last until the owner’s account is brought current. Suspension for a rules violation is typically for a set period of time such as 30 days unless it is a continuing violation.

RECOMMENDATION: If your association is going to suspend voting rights prior to an election, be sure to calculate the time needed to provide proper notice of hearing, and then send written results of the hearing to the owner
after the hearing. Suspending the voting rights of a delinquent owner may impact the quorum or approval requirements for the election.

Thank you to Laurie Poole in our Carlsbad/San Diego offices for answering this question.

MISSING
ELECTION ENVELOPE


QUESTION: What if one forgets to use the small envelope and just uses the outer envelope with signature as required. Is the ballot valid? Should the votes be counted?

ANSWER: Yes, the ballot is valid and the votes should be counted.

Double Envelope Required. The Davis-Stirling Act requires associations to use election procedures that require a double envelope system with the the ballot in a sealed inner envelope. (Civ. Code §5115(a)(1).) However, a ballot is not invalid because it was placed directly in the outer envelope. This ballot irregularity is similar to what occurs when an owner inadvertently signs their ballot.


Most association votes are covered by the voting procedures of Civil Code §5115. These procedures require associations to give members a method for confidentially submitting votes (e.g., with no name, address, lot parcel or unit number on the ballot), plus a way for inspectors of election to ensure votes are cast by eligible members (e.g., identifying information on the outer envelope).

Envelope Signature Required. Owners must fully comply with certain requirements (e.g., sign the outer envelope) to ensure ballot validity. However, when a member does not use the inner envelope but simply places their ballot within a sealed outer envelope displaying their identifying information, it is the member who has waived a certain level of their vote confidentiality. That confidentiality is essentially lost until the ballot is removed from its outer envelope and placed among the other ballots.

Inspector's Authority. When determining ballot validity, inspectors have authority to make a judgment call. We favor counting votes when the intent of the voter is clear and the irregularity is not an otherwise fatal flaw. Inspectors should also take into consideration any specific requirements of an association’s election rules. Inspectors can:

Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this article, the Corporations Code, and all applicable rules of the association regarding the conduct of the election that are not in conflict with this article. (Civ. Code §5110(c)(8))

RECOMMENDATION: Deciding questions of ballot validity is done by the inspectors and not by the attorney, and similar ballot irregularities should be treated similarly. The Inspector's Report should reflect the handling of such irregularities where appropriate. Although the Davis-Stirling Act only requires preservation of ballots, all election materials should be kept for at least one year

Thank you to Nancy Sidoruk, who covers the Inland Empire, for this article.

FORECLOSURE & DEBT COLLECTION
GO TO U.S. SUPREME COURT


The most commonly used foreclosure proceeding is going head to head with one of the country’s top consumer protection statutes. The U.S. Supreme Court has granted a “petition for a writ of certiorari” opening the arena for an epic showdown.

The issue: Do the sometimes onerous conditions on consumer debt collections apply in foreclosures where the creditor is seeking to repossess the real property only and is not seeking a money judgment.

There are 13 federal appellate courts (known as circuits). California is in the 9th Circuit and is joined by its neighbor, the 10th Circuit, in holding that the FDCPA does not apply to non-judicial foreclosures but…the ornery Fourth, Fifth and Sixth Circuits are sticking together and holding that the FDCPA does apply.


Bets are that, when the bout occurs this fall, the Supreme Court will find non-judicial foreclosure to be the victor in this battle of business vs. consumers. For exciting nighttime reading, see Obduskey v. McCarthy & Holthus LLP.

Thank you to Richard Witkin, our foreclosure guru, for this update.


Kudos. The Davis-Stirling website has been a tremendous source of information for the little person who serves on a board. Most of us have good intentions, however don't really know what the hell we need to do to represent the average homeowner and I am sure you know what good intentions get you, in trouble. THANKS SO MUCH. -Joe C.

Santa Barbara Office. Thank you for the newsletter and the news that you have now opened an office in Santa Barbara. We have used your firm for several years now. Thank you. -James N.

Lawyer Letters. Once again, my compliments and gratitude for your excellent website and your case law index by subject. Along with the rest of the website, it is a resource for all persons interested in the advancement of civil society in HOA governance. Thank you for bringing Kulick v Leisure Village to your readers attention. I recommend adding to your case law library Rogo v. Gottlieb. It illustrates limitations on anti-SLAPP motions. -Dan M.

RESPONSE: Thank you for the tip; I added it to the library. Even lawyers sometimes get themselves in trouble with the letters they write.


Train Wreck #1. Sitting here in the relative safety of Arizona, it is fascinating to watch California lurch into complete insanity. Here is the current lurch: SB 1265 is the bill put forward by the Center for California Homeowner Association Law (CCHAL) and Sen. Wieckowski that strips homeowners of their right to adopt reasonable qualifications for board members. CCHAL and Sen. Wieckowski decided you should accept felons and delinquents on your boards as well as those suing your association and those in serious violation of the CC&Rs. -Bob A.

Train Wreck #2. If SB 1265 is adopted into law, associations will be severely limited in their ability to establish reasonable candidate qualifications. Please continue to voice your oppositions to this bill. -LP

Train Wreck #3. What can be done now to push back against the passage of SB 1265? -Maureen B.


RESPONSE: I will let you know when it's time to send more letters. If this bill is signed into law, it will be the third terrible bill in three years backed by the Center for California Homeowner Association Law (CCHAL).

The first was AB 1720 which tried to inject lawyers into board meetings. CCHAL thought it would enhance meetings if everyone had their lawyers in tow. Fortunately it was defeated.


The second was SB 407 (CCHAL & Sen. Wieckowski) which allows any politician, political party or interest group to take over an association's common areas for free and without insurance to raise funds, give speeches or for any other purpose of "public interest." And, the association picks up the tab. It passed.

The third is SB 1265 (CCHAL & Sen. Wieckowski) which strips away consumers' rights so they can't establish qualifications for serving on boards. It forces homeowners to allow felons, delinquents and litigants onto boards of directors (and give them access to records). CCHAL and Sen. Wieckowski made an exception for felons who commit financial crimes--they can be excluded from boards. 


Train Wreck #4. I couldn't help myself. Neopets (a kid's gaming website) applies the term "scalawag" to animated animal pirates. -Frances W.

RESPONSE: We have a few scalawags in the legislature that some might equate to pirates.

 

Train Wreck #5. For one of your always interesting newsletters, would you comment on whether there is a difference between a “member” and a “resident” in an HOA or private community, or are the terms used interchangeably. Civ. Code §4515(b)(2) references “members, residents, and their invitees or guests,” which suggests the terms are not synonymous. -Roger H.

RESPONSE: Civil Code §4515(b)(2) is last year's train wreck where residents can invite "public officials, candidates for public office, or representatives of homeowner organizations to meet with members, residents, and their invitees or guests and speak on matters of public interest."


A resident is someone who lives in the association. A member is someone who owns property in the development which gives them voting rights and common area privileges. A member can be a resident or nonresident. (See Member Defined.)

The CCHAL statute allows residents to invite politicians to the common areas. It also allows them to invite guests and invitees to hear the politician speak and raise funds. A "guest" is someone you invite to your house. An "invitee" is someone you invite to attend a gathering, entertainment, or to do something.

That means a renter can invite a politician to speak and raise funds using your common areas. In addition, the renter can invite people to hear the speaker. The statute does not limit invitees to residents. That means people from outside the association can be invited into your common areas to participate in a fundraising event.


AB 2912 #1. Are you saying that we should insure our reserve fund plus 3 months of assessments? Could you explain this a little further. Is this common practice? -Helen S.

RESPONSE: Because of embezzlement, it is good practice for associations to insure their funds, add internal controls, and regularly review their finances.

Unfortunately, too many associations are lax in this regard. AB 2912 was introduced to help protect association finances.

AB 2912 #2. Always enjoy the newsletter and find it very informative. In regards to the most recent one and the question regarding insuring the balance in the reserves plus 3 months of assessments. Many lenders require the association’s insurance to meet those specifications to loan on a unit. Thanks for all the info you provide as well as always adding a good laugh! -Laura F.


Marginal Boards. I believe there is very little an owner can do if their board falls into the category of marginal boards except sue them which, as you say, is costly. This leads me to ask, what value is the Davis-Stirling Act as there is not any teeth in the Act? -Mike S.

RESPONSE: The Davis-Stirling Act has as much or more teeth than similar laws dealing with public officials. For example, suing government officials is not always possible, and when it is, it's more difficult than suing board members.

The Act allows you to sue your association in small claims court, it allows fines to be imposed, it provides for IDR and ADR, and it allows for the award of attorneys fees. Association boards can be ordered to comply with the law, and boards can be replaced.

Discourage Volunteers. Associations, like many cities and states can be badly managed. There is no "magic bullet" legislation. Passing ever-restrictive and punitive laws regulating associations is effective at one thing--discouraging good, qualified members from serving on the board.

Too Many Laws. There are already so many laws that lawyers and management companies and professional inspectors of election and consultants and CPAs have become a necessity for associations. In addition to discouraging volunteers, it drives up members' dues. The regulations have become an impossible burden on small associations.

RECOMMENDATION. There is a role for regulation but the excessive and unbalanced regulation imposed by CCHAL is not the answer. It has unintended, negative consequences. More regulation is not the best answer to every problem.

People who are unhappy with their association but keep putting the same people into office should rethink that strategy. It comes down to making a concerted effort to influence directors or replacing them. Suing is always an option but rarely the best one.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

California Wildfires

Nov 18, 2018 0 Views 0 Comments


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.

CC&R CAP
ON ASSESSMENTS

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
ADAMS|STIRLING


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.

ALISON GREINER
JOINS ADAMS|STIRLING


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.

6th ANNUAL
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
25th ANNUAL
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.

For more information, see the Wilshire House Managers' Luncheon.
 


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.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Manager as President

Nov 11, 2018 0 Views 0 Comments

QUESTION: Can we operate without a president? 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. How long can we function this way?

ANSWER: You should not be functioning that way at all. By law, all corporations must have a president, secretary and treasurer. (Corp. Code §7213(a).) It is possible there are efforts behind the scenes to resolve the problem and the situation is temporary. If not, the scenario you describe is troubling.

Business Judgment Rule. If the board is truly accepting legal advice from a manager, especially when there is a threat of litigation, directors have legal exposure. It puts them outside the protection of the business judgment rule. Without that shield, board members can be held personally liable for the decisions they make. (See Palm Springs II HOA v. Parth.)

RECOMMENDATION: Your board should put the association's insurance carrier on notice of the threat of litigation you referenced. Next, directors should retain an experienced association lawyer for its legal advice. Finally, they should appoint one of their directors as president.

ALCOHOL AT
POLITICAL MEETINGS


QUESTION: Is it permissible for attendees at a political meeting using HOA facilities (at no charge and with no insurance requirement) to bring alcohol for their personal consumption?

ANSWER: It depends on your rules. Despite the new legislation allowing political rallies on common areas, associations can adopt reasonable restrictions on the use of its common areas, including restrictions on alcohol consumption.

Restrictions on Associations. What associations cannot do is adopt rules that require a member or resident to pay a fee, make a deposit, obtain liability insurance, or pay the premium or deductible on the association’s insurance policy for using common areas to peacefully assemble and freely communicate with one another and with others with respect to common interest development living or for social, political, or educational purposes. (Civ. Code §4515.)

Restricting Alcohol. Given the current state of affairs in our nation's politics, restricting alcohol at political meetings seems prudent.

TEMECULA OFFICE
OPENED
 
I am pleased to announce the opening of our newest office in historic Old Town Temecula.
 
Known for its wine country and hot air ballooning, Temecula is a rapidly growing hub for community associations throughout the region.
 
Our office will be managed by senior attorney Nancy Sidoruk. Nancy and her team will provide legal services in the Inland Empire and Coachella Valley. The address is:
ADAMS | STIRLING
41911 5th Street, Suite 302
Temecula, CA 92590

Contact us for a proposal for legal counsel and board training services.


Creepy Neighbor #1. I always find your newsletter an important resource to add to my understanding of what it means to live in a community of self-governing citizens.

As a psychotherapist, I have to take issue with your casual misuse of the word “bipolar.” The creepy guy you mention who trespasses in the space of other residents is more likely to be character/personality disordered with boundary issues. Thank you for your always enlightening newsletter. -Diane C.

RESPONSE: I can't claim credit for the description, "crazy, bipolar" is  how he described himself. His bipolar condition is likely not the underlying problem. As you pointed out, he seems to have boundary issues.

Creepy Neighbor #2. Bipolar people are not “crazy.” They don’t usually go into garages to scare females. Bipolar is caused by the absence lithium in the system and it is treatable with medication prescribed by a psychiatrist. It sounds like this man has poor impulse control and acts out. Whether or not the board can require him to seek treatment is something your firm can advise them on. -John A.

RESPONSE: It has been my experience that residents with mental issues are very difficult for boards to handle. Without proper treatment, they often do not respond to cease and desist letters, hearings, fines, suspension of privileges or threats of litigation. It is always a slow, frustrating process dealing with residents with mental illness.

*****

Election #1. Love your articles...just a question about your comment regarding elections by acclamation. I believe the opportunity for write-in candidates would be eliminated if the board chose not to mail out ballots. Could you address this please? -Rick H.

RESPONSE: The Davis-Stirling Act states that associations can adopt election rules that permit nominations from the floor and write-in candidates. (Civ. Code §5105(b).) By implication, unless an association's bylaws or election rules provide for write-in candidates, they are not allowed.

If election rules provide for write-ins, balloting cannot be waived since there is a chance someone could write-in a candidate. To avoid uncertainty, many associations amend their governing documents to eliminate write-ins so elections by acclamation can take place.

Election #2. The board canceled our last election claiming there were not enough ballots for a quorum even though our election rules state that no quorum is required for electing directors. The board dismissed everyone and then opened ballots. The board claims this was legal. If our bylaws say we don't need a quorum can we still hold the annual meeting and open the ballots that are turned in? -Monica W.

RESPONSE: Yes, you can (and should). If your bylaws do not require a quorum for the election of directors, ballots should be opened at the annual meeting and counted in front of the membership. (Civ. Code §5120(a).) The results must then be (i) reported to the board, (ii) recorded in the minutes of the next meeting of the board, (iii) made available for review by the membership, and (iv) within 15 days of the election, reported to the membership. (Civ. Code §5120(b).)

If your association's election rules are being violated by the board, members have one year to take legal action to address the violation.

Election #3. We are a 4-unit association and we all agree on a CC&R amendment. Do they have to use the written secret ballot to to approve it or can we use a vote by acclamation since we all agree? -N.S.

RESPONSE: Election requirements under the Davis-Stirling Act are especially burdensome on small associations. Unfortunately, your 4-unit association is required to follow the same requirements as a 400-unit association. That means you are required to publish written election rules, seek nominations, mail out double-envelope ballots, and allow for 30 days of balloting.

In my experience, many (most?) small associations of ten units or less follow a much more relaxed approach to elections. As long as no one objects to the process, members attend the annual meeting and elect directors by a show of hands or voice vote. Some use secret balloting by passing around slips of paper and writing down their choices.


Election #4. What if one forgets to use the small envelope and just uses the outer envelope with signature as required. Will the ballot votes be counted? -Linda W.

RESPONSE: Yes, the votes should be counted. (See ballot irregularities.)

*****


Fidelity Bond #1. I just wanted to clarify that associations are  not purchasing fidelity “bonds.” They are purchasing a fidelity (employee dishonesty) crime (non-employee coverage) policy. A bond is a different instrument. This may be semantics, but we should be using the proper terminology in the industry. -Joel M.

Fidelity Bond #2. If an association has a $500,000 employee dishonesty limit which is in compliance with Fannie Mae formula, does the computer and funds transfer fraud have to be $500,000 or can it be a lower limit and how is that formula determined? -Jon C.

RESPONSE: The coverage requirements for "computer and funds transfer fraud" must be an amount equal to or greater than the combined amount of the reserves and total assessments for three months (unless the governing documents call for greater limits). If that comes to $500,000, then that is the amount of coverage needed.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Crazy Bipolar Neighbor

Nov 4, 2018 0 Views 0 Comments
QUESTION: We have an owner who startles female tenants by entering their open garages. He was sent a warning letter but did it again with new female tenants moving in at 10 p.m. His said he is a friendly, concerned, crazy, bipolar neighbor. I consider it trespassing. Am I off base?
 
ANSWER: You are not off base to be concerned. I suspect female residents would be more than startled. Your neighbor's "crazy bipolar" comment does not help.
 
Criminal Trespass. There are many types of criminal trespass. In general, a person must willfully enter onto another's property with the intent to interfere with property rights (such as burglary or vandalism) or intent to harm the person, or refuse to leave the property upon request. (See Penal Code §601 §602 for a full list of factors.)
 
Scaling a fence to enter a property shows willful entry and may be prosecutable depending on intent. If the intent is to retrieve an errant football, a district attorney will decline to prosecute. Similarly, walking into someone's open garage to greet a neighbor would not be deemed a crime.
 
Civil Trespass. Criminal trespass and civil trespass are essentially the same. The difference is enforcement. Governmental authorities enforce criminal trespass whereas an aggrieved owner enforces civil trespass via litigation.
 
In California, civil trespass now includes invasion of privacy. Under Civil Code §1708.8(a), a person is liable for invasion of privacy if he knowingly intrudes onto private property without permission to capture a visual image, sound recording, or other physical impression of a person engaging in a private, personal, or familial activity.
 
Entering a garage to check on someone's well-being would not qualify as an invasion of privacy.
 
Breach of CC&Rs. Your best bet is to take action under the CC&Rs. If your neighbor continues to enter garages after being told to stop, he can be fined under the nuisance provision of your CC&Rs.
 
RECOMMENDATION. The board should call your "crazy bipolar" neighbor to a hearing and make it clear that entering garages uninvited is unacceptable and if he continues it would subject him to fines and suspension of privileges.
IS CANCELING AN ELECTION
TO SAVE MONEY LEGAL?
 
QUESTION: For our election, only three candidates volunteered for the three open seats. The president wants to cancel the election to save money. Is this against the law?
 

ANSWER: I don't believe it is against the law. Your president is not really canceling the election, the election will be determined by acclamation rather than balloting. Unfortunately, there is nothing in the Davis-Stirling Act addressing acclamation, so it's unclear.

Argument Against Acclamation. The argument for mailing ballots, even when seats are uncontested, is found in Civil Code §5100(a), which states:

...election and removal of directors... shall be held by secret ballot...

Arguments for Acclamation. There are two arguments in favor acclamation. The first is that balloting is required only when an election requires a vote. If the election is uncontested, there is no need for a vote. Second, the law does not require idle acts nor does it favor form over substance. (Civ. Code §3532Civ. Code §3528; Letitia V. v. Superior Court (2000) 81 Cal.App.4th 1009, 1016.) Sending out ballots would be an idle act since the outcome is already known. I find these two arguments persuasive.

Legislation. This year's Senate Bill 1128 removed any ambiguity by explicitly allowing associations to avoid the cost of mailing ballots when an election is uncontested. Unfortunately, the cost-saving measure was hijacked by the Center for California Homeowner Association Law (CCHAL) which added language that stripped away homeowners' rights regarding candidate qualifications. Thankfully, the altered bill was vetoed by the governor.

RECOMMENDATION: Dispensing with balloting in uncontested elections makes the most economic sense. To remove any ambiguities, associations should amend their bylaws to waive balloting in uncontested elections (along with eliminating write-ins, floor nominations, quorum requirements, proxies and cumulative voting).

CHANGING
DIRECTOR QUALIFICATIONS


QUESTION: Can boards change director qualifications without amending the bylaws? Our previous board changed the qualifications and added that a recalled board member could not join the board for three terms (6 years.) Is this legal or reasonable?

ANSWER: Arguably, it is legal. The court of appeal in Friars Village v. Hansing ruled that boards can adopt director qualifications via a rule change provided the qualifications are "reasonably related to the performance of the Board and will serve to protect its overall mission--protecting the best interests of the Association."

Limited Applicability? However, the court's decision was based on a specific set of circumstances coupled with the language in the association's governing documents. As a result, it is unclear if the decision opened the door to all associations freely adopting director qualifications via rule changes.

Opposing View. Personally, I'm not a fan of creating qualifications via rule changes. It means they can change from election to election by majority vote of each new board of directors. I believe the better approach is to establish qualifications by amending the bylaws. It creates more stability in the election process and directly involves the membership in approving such standards.

Reasonable?
Some owners are so disruptive, there is good reason to keep them off the board for a period of time once they are recalled. Is six years reasonable? I don't know how a court would rule. Your community will have to decide for itself how best to handle the situation.

ORANGE COUNTY
OFFICE
 

I am pleased to announce our Orange County office is growing! Partner Jasmine Hale is now overseeing the office and attorney Jennie Park is joining senior attorney Wayne Louvier and client relations director David Rico on our Orange County team.

We look forward to meeting managers, board members, and homeowners at future Orange County CAI and CACM events.

Contact us for a proposal when your association needs legal counsel or would like board training.


Balconies #1. You state “bicycles should be encouraged” on balconies. Did you really mean that? The following statement seems to imply the opposite. This is my first newsletter and I’m looking forward to more. -Judy M.

RESPONSE: You were close. Bicycles, i.e., riding bicycles, should be encouraged. Storing bicycles is an important issue. Some associations allow storage on balconies, some provide secure cages in their parking structure, some have bike racks in the common areas. Each community is different and should work out what is best for them.


Balconies #2. Our board had a difficult homeowner who refused to remove three huge pots with large plants in them. The company that did our decksk said the pots would eventually damage the deck. Rather than fine the homeowner the board opted to send them a letter stating they were responsible for any damage to the deck. Despite the potential cost the pots remained. -John A.

RESPONSE: The board should realize they are simply postponing the battle. It happens now before damage occurs or it happens later when common areas and units below suffer water damage.

If the board does not want to force the owner to remove the pots, it should call him in for a hearing. The board needs to make it abundantly clear that large pots will damage the waterproofing membrane and the owner will be responsible for all resulting damage to the balcony and surrounding common areas and lower units.

The hearing and decision need to be recorded in the minutes. The letter with the board's decision along with the first letter giving notice of liability should to be kept in the person's file. The board will need them when wood rot and related water damage occur because of the heavy pots. The board should also consider scheduling annual inspections of the person's balcony.

*****

Fidelity Bond. Your series of articles on the new fidelity bond requirements were helpful. I'm still unclear about the computer/transfers fraud. What are the coverage requirements? Are they the same as the fidelity bond---reserves plus 3 months of assessments? -J.A.

RESPONSE: Yes, they are. The new statute, effective January 1, 2019, states that coverage for computer fraud and funds transfer fraud be part of the fidelity bond. That means an amount equal to or greater than the combined amount of reserves and total assessments for three months (or better).

Similarly, if the association uses a managing agent or management company, the association’s fidelity coverage must include dishonest acts by that person or entity and its employees at the bond's full limits (or greater). It should be noted that the new statute defers to the governing documents if they require greater coverage amounts.

RECOMMENDATION: I encourage boards, managers and insurance agents to jump on this. Time is growing short.

Adrian J. Adams, Esq.

Boards can contact us for friendly, professional advice.

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

Regulating Bicycles on Balconies

Oct 28, 2018 0 Views 0 Comments

QUESTION: Can an HOA prohibit keeping your bicycle on your own balcony?

ANSWER: It is common for associations to regulate what can be kept on balconies, including bicycles.

Nuisance. Without rules, people would hang laundry over balcony railings and store refrigerators, weight lifting equipment, boxes, etc. on their balconies. Some put chicken wire around the balcony to turn it into an aviary. Others turn their balconies into mini-rain forests with hundreds of hanging and potted plants. They aggravate neighbors and damage balconies.

Reasonable Rules. The key to rulemaking is making them reasonable. Some associations allow bicycles on balconies while others do not. As a rule, bicycles should be encouraged. Your association must decide how best to handle where to store them.
To accommodate bicyclists, some associations provide secure storage, such as chain-link enclosures in the parking structure.

RECOMMENDATION: Talk to your board about forming a committee of homeowners to study the issue and recommend a solution.

UNRELIABLE DIRECTOR
RUNNING FOR THE BOARD


QUESTION: We have a board member who resigned twice from his first term position and then asked to be reinstated. The board granted his request.

He was then elected for a second term and made president. Within months he resigned again. He is thinking about running again in the fall election. Can a person be on the ballot when he keeps resigning?

ANSWER: Unless your bylaws provide otherwise, he can keep running, getting elected, and resigning indefinitely. It's up to the membership to elect someone more reliable. To that end, it's okay for members to send campaign material (at their own expense) pointing out this owner's penchant for resigning.

CC&Rs MYSTERIOUSLY
AMENDED


QUESTION: When I moved into my HOA 29 years ago, the CC&Rs made the association responsible for maintaining the exterior of the buildings. Now our CC&Rs state that homeowners are responsible for the exterior. The members never voted to make such a change. Is this legal?

ANSWER: Except under limited circumstances, boards cannot amend CC&Rs without approval of the membership. Boards are allowed to (i) delete developer marketing language, (ii) delete discriminatory language, and (iii) update Civil Code references. All other changes require membership approval.

Member Approval. Changing maintenance obligations requires membership approval via secret ballot. If the board recorded a maintenance amendment without membership approval, the amendment is not valid. (Taormina Theosophical Community v. Silver.)


RECOMMENDATION: Do a little investigation and find out when the amendment was approved and whether it was by the membership or the board. If it was recorded without member approval, the amendment is void.

UNINSURED GRANDFATHERED
GARDENER
 
QUESTION: Our gardener of many decades, who will be turning 70 soon, is neither licensed, bonded, nor insured. Years ago, when the HOA began using only workers or companies who were insured, he was "grandfathered." Does our board have a duty to ask him to get insurance or quit?
 
ANSWER: I cringe whenever I hear boards are hiring workers without insurance. Whether old or young, workers are subject to injury. Without insurance, your association is exposed to significant potential liability.
 
Worker's Comp. If your grandfathered gardener works primarily for your association, he is likely not an independent contractor. He will be deemed an employee. In addition to liability for injuries, this creates a separate set of problems related to payroll withholdings and overtime.
 
If he is truly an independent contractor, but unlicensed and uninsured, your association automatically becomes his employer if he is injured. (State Compensation Ins. Fund v. Workers' Comp. Appeals Board.)
 
In either scenario, your association could face large special assessments since there is no cap on damages if your gardener is injured, including claims for pain and suffering. With insurance, the claims are limited and the loss is paid by insurance.
 
RECOMMENDATION: To protect your association, you can either (i) require your gardener carry insurance, (ii) make your gardener an employee of your association and insure him, (iii) make him an employee of your management company and they insure him, or (iv) stop using him. You should talk to legal counsel about how best to handle this.
 
NEW
SAN DIEGO OFFICE
 
I am pleased to announce the opening of a new San Diego office in prestigious Tower 591 in Mission Valley. Our address is:
 
ADAMS | STIRLING PLC
591 Camino de la Reina
Suite 905
San Diego, California 92108

Our legal team in San Diego is Jamie Hendrick, Carrie Heieck, Nancy Sidoruk, and Candace Schwartz under the leadership of Laurie Poole. We look forward to building more long-term relationships with clients in beautiful, vibrant San Diego.
 


SB 1265 & 1128. I read your article about Governor Brown's veto of Senate Bills 1265 and 1128. Thank you for persuading the Governor to veto these horrible bills. -C.T.

RESPONSE: I had a small role in opposing the move by the Center for California Homeowner Association Law (CCHAL) to strip 13 million homeowners of their right to qualify who served on their boards. Two organizations were in the forefront in persuading the Governor to protect consumer rights: (1) the Community Association Institute's California Legislative Action Committee (CLAC) and their legislative advocate Louie Brown and (2) the California Association of Community Managers (CACM) and their legislative advocate Jennifer Wada.

*****


Board Meeting #1. In the context of unauthorized board meetings, is "majority" meant as majority of the the serving board members, or majority of authorized board members? Example: Five members are authorized but only three seats are filled. Two members talk about whether or not to hire a new landscaper. Legal or illegal? -Steve C.

RESPONSE: Board meetings are defined by the Davis-Stirling Act as a gathering of a quorum of directors at the same time and place to "hear, discuss, or deliberate upon any item of business that is within the authority of the board." (Civ. Code §4090.) A "quorum" is defined as "a majority of the number of directors authorized in the bylaws." (Corp. Code §7211(a)(7).)

In the scenario you posed, two directors talking about hiring a new landscaper does not violate the Open Meeting Act. Even so, your board is operating with only three directors. That means two directors effectively control the voting. In the spirit of openness, you should save your discussions for board meetings. Also, you should make a concerted effort to fill your empty seats.


Board Meeting #2. What if director 1 contacts director 2 and discusses a matter on the agenda without discussing how to vote? Then director 1 calls director 3 and the same thing occurs. Then director 1 calls director 4, etc. Is this okay because they don't discuss how to vote? -Sue O.

RESPONSE: No, it's not okay. It's still a chain meeting because the directors are discussing an item of business that will come before the board. (Civ. Code §4090.)

Board Meeting #3. It has always been my understanding that motions must be approved by a majority of the authorized board, not those who are present. Thus, if 3 out of 5 show up, a vote of all 3 must be positive in order to pass an action item. Please clarify this. -Maggie L.

RESPONSE: A majority of the authorized seats constitutes a quorum. (Civ. Code §4090(a).) Unless your bylaws define "approval" to mean a majority of authorized directors, any decision by a majority of the directors at a duly noticed meeting where a quorum is present is the act of the board. (Corp. Code §7211(a)(8).)

For example, if you have a 5-director board, three directors constitute a quorum. If three directors attend a duly noticed meeting, the board can conduct business. At that meeting, a majority of the quorum (two) is sufficient to approve motions (unless your bylaws state otherwise).

NEW FIDELITY BOND
REQUIREMENTS


Fidelity Bond #1. The new fidelity bond requirements take effect on January 1, 2019. Do all HOAs have to be in compliance by that date or can they comply upon renewal? -Tianna T.

RESPONSE: Assembly Bill 2912 did not make allowance for renewal dates. All associations must be in compliance on or before January 1, 2019.

Exposure to Litigation. If a statutory bond is not in place January 1 and the association suffers a loss on January 2, the board may be forced to impose a special assessment to cover the loss. Angry homeowners will likely threaten (and file?) lawsuits against directors for their failure to comply with the statute.

Bond Requirements. Before January 1, 2019, associations need to (i) establish proper limits for their bond in an amount equal to or more than the combined amount of the reserves and total assessments for three months, (ii) cover all persons handling funds, including officers, directors, employees, managing agents and the management company, and (iii) carry coverage for computer/funds transfer fraud.

Computer Fraud. The computer fraud requirement is especially important since cyber fraud continues to escalate sharply. The prevalence and sophistication levels seem to increase daily.

For example, a hacker could easily access a treasurer's computer and completely wipe out the association's accounts by electronically transferring all operating and reserve funds to an offshore account. If a management company is targeted, the cyber criminal could access a manager’s entire portfolio and empty all accounts.

Time is Short. To get a proper fidelity bond in place by January 1, 2019, boards must (1) determine the highest level of reserves to insure through December 31, 2019 plus 3-months' of assessments, (2) identify officers, directors, employees, and managing agent/companies to include, and (3) add computer/transfer fraud coverage.

Carrier Policy Forms. The carrier may need to amend its policy forms to accommodate the computer/transfer fraud element as well as increased limits and managing agent elements. A proposal must then be presented to the board, approved and bound. If a particular carrier cannot meet the new statutory requirements, you will need to seek coverage elsewhere.

Recommendation: Contact your insurance agent now and start the process.

Fidelity Bond #2. If an association carries a crime policy as well as a directors and officers (D&O) policy, does it need a fidelity bond? -Diane B.

RESPONSE: A crime policy and fidelity bond are the same. The coverage is also referred to as employee dishonesty insurance. Even if an association already has a fidelity bond/crime policy, it is unlikely it meets all the requirements that go into effect January 1, 2019. Boards and managing agents should immediately contact the association's insurance agent and give them a copy of the Assembly Bill 2912 and ask for a proposal that satisfies the new requirements.

Fidelity Bond #3. We were wondering about the new fidelity bond law. Does the manager as additional insured have to carry the same limits as the association? -Wendy G.

RESPONSE: The new fidelity bond requirement
does not make the manager an additional insured. It requires the association to maintain prescribed levels of insurance to protect it from loss in the event the managing agent steals the association's money.

Unless the governing documents require greater coverage amounts, the association shall maintain fidelity bond coverage for its directors, officers, and employees in an amount that is equal to or more than the combined amount of the reserves of the association and total assessments for three months. The association’s fidelity bond shall also include computer fraud and funds transfer fraud. If the association uses a managing agent or management company, the association’s fidelity bond coverage shall additionally include dishonest acts by that person or entity and its employees.

Fidelity Bond #4. For computer and electronic transfers fraud, is there a specified amount that is required (at least $10,000 or the three months of assessments plus reserves) or is it that there is just coverage included in the policy? If it is just that the coverage is included, do you have a percentage recommendation for the amount that should be included in the policy?

RESPONSE: I'm not sure I followed your question. It doesn't matter if an employee steals cash, alters checks, or electronically transfers funds into his account--t
he statute requires insurance "equal to or more than the combined amount of the reserves of the association and total assessments for three months." For a small association, the fidelity bond might be $50,000. A large association might need $5 million.

The $10,000 requirement you referred to is not an insurance requirement, it's an approval requirement. The statute requires prior board approval whenever there are transfers greater than $10,000 or 5% of an association's total combined reserve and operating account deposits. As I pointed out in my October 14 Newsletter, the transfer requirement is ambiguous and needs clarification in future legislation. I also discussed the two-signature problem related to reserve transfers.

Thank you to Tim Cline, CIRMS of the Cline Agency for his assistance with these questions.

Adrian J. Adams, Esq.

 

Boards can contact us for friendly, professional advice.

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

Veto by Governor

Oct 13, 2018 0 Views 0 Comments

Good news! Anti-consumer legislation sponsored by the Center for California Homeowner Association Law (CCHAL) was vetoed by Governor Brown.

SB 1265 is the bill that stripped away the rights of 13 million homeowners to adopt qualifications for who served on their boards. The bill sought to push felons, litigants and delinquents onto boards.

SB 1128 was also vetoed. The bill as originally drafted was good. It would have allowed associations to avoid costly election balloting if the number of qualified nominees was equal to or less than the number of available seats on the board. Unfortunately, the bill was amended by CCHAL to incorporate the worst elements of SB 1265, making it unacceptable.
Fortunately, Governor Brown vetoed both bills. His veto message noted that homeowner associations are not all alike and one-size-fits-all legislation is not appropriate.

Thank you to the California Legislative Action Committee and their advocate Louie Brown for protecting the rights of homeowners. Also, thank you to Governor Brown for vetoing this flawed legislation.

DANA ROSENBERG
JOINS ADAMS|STIRLING


I am pleased to announce that attorney Dana Rosenberg joined our firm and will head-up our Santa Barbara office.

Litigation. Prior to joining our firm, Dana's litigation practice included both state and federal courts involving real property disputes, fraudulent transfers, easements, use permits, environmental issues, business and contract disputes, and homeowner association disputes.

Transactional. Dana's transactional work includes commercial and residential sales and leasing, business purchase and sales, loans and loan sales, and community association documents. Dana also has an interesting niche in equine sales and leasing, specializing in Arabian horses.

Education. Dana earned her bachelor of arts from UC Irvine where she graduated magna cum laude and Phi Beta Kappa. This was followed by a master of arts in English where she graduated summa cum laude. Dana then earned a juris doctorate from the Santa Barbara College of Law.


We are delighted to have such an experienced attorney join our team providing legal services to our coastal and inland clients from Ventura to Paso Robles. If your association needs legal services, contact us for a proposal.


Board Meetings #1. I attended a board meeting with two board members present for a three-person board. The two directors were married, owning one unit. Is that legal? -Bob B.

RESPONSE: Yes, it's legal. Thanks to the Governor's veto of SB 1265 AND SB 1128, homeowners have the right to establish reasonable qualifications for who may serve on their boards. Co-owners on the board create a voting block that many associations are not comfortable with. This situation can be eliminated by amending the bylaws. Co-owners can serve on the board, just not at the same time. For a list of common director qualifications, see "Director Qualifications."


Board Meetings #2. In a five-member board, only three (a quorum) attend the session. Two of the members of the quorum vote in favor of a proposal; one is opposed. Is the measure passed? -George H.

RESPONSE: Yes, it passes. You need a quorum to conduct business. Once you have a quorum, a majority of the quorum is sufficient to pass a motion.


Board Meetings #3. What if we have a five-director board but can never get more than three owners willing to serve on the board? What do we do? -Steven S.

RESPONSE: You can amend your bylaws to reduce the number of directors to three. Be sure to check your articles of incorporation, they may need to be amended as well. In the alternative, you can change the definition of a quorum to a majority of seated directors. That allows you to keep five seats in case other members want to serve. 


Board Meetings #4. Is it okay for a quorum of directors to attend a non-board meetings to only listen? -Bill B.

RESPONSE: There are limited circumstances under which a majority of directors (or the entire board) can meet without it constituting a board meeting. The circumstances, however, are not addressed in the Davis-Stirling Open Meeting Act.

For guidance, we can turn laws governing public legislative bodies and agencies such as the Brown Act and the Bagley-Keene Open Meeting Act. They allow a majority of board members to attend a conference or similar gathering open to the public and purely social or ceremonial occasions.

Even then, limitations on discussing business still apply. For more information, see Exceptions to the Open Meeting Act.

Board Meetings #5. We have a five-member board. Director 1 contacts director 2 and discusses a matter on the agenda for the upcoming board meeting. They agree on how they will vote. Director 1 then calls director 3 and director 2 calls director 4. They all agree on how to vote.
Is this a board meeting? -Jim K.

RESPONSE: Yes. What you described is a "chain meeting." This kind of meeting is not addressed by the Davis-Stirling Act. It is, however, addressed by the Brown Act, after which the DS Open Meeting Act is modeled.

The Brown Act prohibits such communications, whether direct, by intermediaries or electronically. A court would likely apply the same principles to homeowner association boards.


Board Meetings #6. We have some projects underway and new board members coming on next month. Can we instruct our manager to send them copies of the previous years’ executive meeting notes so they can get up to speed? -Stephanie L.

RESPONSE: I wouldn't. You would be disclosing confidential information involving other matters (disciplinary actions, personnel matters, etc) to non-directors who have no obligation to keep such information confidential. It would be better to wait until they are elected and then provide the information. At that time, your outgoing directors can brief them on the project.


Board Meetings #7. I want to join the board of our association but the meetings are on Saturday mornings which I cannot attend since I am an orthodox Jew. I previously been asked to join the board but explained I couldn't unless the meeting day was changed, but nothing was done. If I formally request the day be changed, is the board required to change it? Is this unlawful religious discrimination if they don't? -Alan S.

RESPONSE: There is no law that directly applies to this situation because serving on a board is a volunteer position. Even though Title VII of the Civil Rights Act of 1964 does not apply, it requires employers to reasonably accommodate sincerely held religious unless doing so would impose an undue hardship on the employer.

Accommodating a well-recognized religious practice, such as observing Saturday Sabbath, qualifies. Using this principle, boards should reasonably accommodate a director's request if possible. Where this can be problematic is if other directors observe Sunday or the best day for most homeowners to attend board meetings is Saturdays. Boards need to balance competing interests when setting their meeting dates and times.

ASSEMBLY BILL 2912
 

In my last newsletter, I reported that Assembly Bill 2912 was signed by the Governor. The bill is designed to prevent fraud and embezzlement related to association finances.

HOA Finances #1. As always, your newsletters are very helpful. I have a question about AB 2912. Does it take affect immediately? -Wally G.

RESPONSE: The new law takes effect January 1, 2019.


HOA Finances #2. If the monthly review of financial statements can be done independent of a board meeting, where is the evidence that it was actually done? -Paul C.

RESPONSE: If the board doesn’t meet monthly or a monthly meeting isn’t held for some reason, financial statements can be sent to each director for review. In the alternative, an executive committee consisting of the treasurer and at least one other board member can review the finances. The review is documented in the minutes of the following open board meeting.

It can be recorded as simply as, “Did everyone review the association's financial records last month? Are there any changes or corrections? I move to ratify the financial state for [month and year]." The motion is then seconded, approved and recorded in the minutes.

HOA Finances #3. We allow our president to transfer funds between our reserves, checking, and savings as-needed to meet operational needs. Since all accounts are in the association's name is this a “transfer” under the bill? -Gary K.

RESPONSE: Good question. The bill does not define transfers. Clearly, any transfer of funds greater than $10,000 that leave the association requires board approval.


Does a monthly transfer of $11,000 from operations into reserves require board approval? I wouldn't think so. The legislature is not worried about money entering reserves. Arguably, the board's approval of regular deposits into reserves occurred when the annual budget was approved.

It's the transfer of money out of reserves that requires separate approval. The requirements of section 5510(a) of the Civil Code are unchanged by AB 2912: "The signatures of at least two persons, who shall be directors, or one officer who is not a director and one who is a director, shall be required for the withdrawal of moneys from the association’s reserve account."

That means any transfer of funds from reserves, even if into another association account, requires board approval. With online electronic transfers, meeting the statutory requirement of two signatures is problematic. No signatures are required for electronic transfers, only the push of a button.

Even if the transfer has prior board approval as noted in the minutes, you still have only one signature--the Secretary's. Moreover, banks don't require two signatures for transfers. Even if directors tried to add signatures to an electronic transfer, there is nowhere to record them. The only way to meet the statute's requirement is to abandon electronic banking and do everything with paper checks.

The legislature's requirements are way behind the times. The two-signature requirement needs to be rewritten. In addition, "transfer" should be defined.


HOA Finances #4. We have our utility bills set for automatic payment. How is that affected? -Gary K.

RESPONSE: If the monies are coming out of your operational account, an annual resolution authorizing the transfers should be sufficient. Make sure someone is monitoring the transfers. If a utility bill suddenly goes from $100 per month to $1,000 per month, board members should investigate.

HOA Finances #5. As I read the new law, the requirement for fidelity insurance does not apply to a self-managed HOA, correct? Your newsletter seems to imply that it would apply to all. Please clarify. -Stuart S.

RESPONSE: The requirement applies to all associations. The bill makes no distinction between large and small associations or self-managed and professionally managed associations. The only reference to managed associations requires the association’s fidelity bond coverage to additionally include dishonest acts by that person or entity and its employees.


HOA Finances #6. In regards to fidelity bonds, we currently carry employee theft and dishonesty coverage, would this suffice in order to be compliant if the coverage itself meets the proposed requirements? -Gordon M.

RESPONSE: As long as your policy covers theft by officers, directors and anyone else handling the association's funds (not just employees), you will be in compliance.

Another point to consider is the amount of coverage. The statute requires
three months of assessments plus reserves. If you are making regular contributions into reserves (as you should), the amount of insurance needed will be greater at the end of the year than at the beginning. That means the insurance you purchase at the beginning of the year should be equal to or greater than the amount of reserves anticipated by the end of the year. If your governing documents require greater coverage, make sure you comply.

Because you are insuring your managing agent, including computer fraud, you should inquire what steps they take to protect their computer servers from hacking. If their protocols are lax and software protections weak (or nonexistent), your association's monies are at risk.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Working Board Meetings

Oct 4, 2018 0 Views 0 Comments

Everyone,

It's been awhile since I published a newsletter and I'm getting lots of emails asking if I had removed readers from the newsletter because they had been bad.

No one has been bad (that I'm aware of). The delay is because I upgraded the security levels on my newsletter and moved to a more secure platform.

I've also been busy hiring people. I've added four more lawyers to the firm and will be announcing them once I get photos.

Adrian

WORKING
BOARD MEETINGS


QUESTION: We would like to have manager-board "working meetings" where no votes are taken. For example, we want to come up with ideas for improving the park. One of our board members said we could only do that if there is no quorum of directors.

ANSWER: Your board member is correct. It doesn't matter that no votes will be taken. If a majority of directors attend a meeting to hear board business, it's deemed a board meeting.

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

Meeting Types. You can still hold working meetings with a majority of directors but only if you give four day's notice and post an agenda. I put together a summary of board meeting types you may find useful.

IS TWO OUT OF
FIVE A MEETING?


QUESTION: In the context of unauthorized board meetings, is majority meant as majority of the the serving board members, or majority of authorized board members? For example, five directors are authorized but only three seat are filled. Two members talk about whether or not to hire a new landscaper--legal or illegal?

ANSWER: Two out of the five authorized directors is not a quorum. You need three directors to establish a quorum to conduct your meetings even with two empty seats. Per the Davis-Stirling Act:

A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board. (Civ. Code §4090.)

Unless the bylaws state otherwise, a majority of the number of directors authorized in the bylaws constitutes a quorum of the board for the transaction of business. (Corp. Code §7211(a)7.)

ELECTRIC VEHICLE
CHARGING STATIONS

QUESTION: The Davis-Stirling Act requires homeowners to meet certain requirements when installing an electric vehicle charging station. Newer vehicles can now charge from a standard outlet without the need for a charging station. Does that mean we do not need to comply with Civil Code §4745?

ANSWER: Compliance issues depend on how the electricity is supplied and paid for. If you plug into a common area outlet, that means your neighbors are paying to charge your vehicle. I don't know any associations that would agree to that.
 
You can avoid installing an EV charging station if you work out a payment plan with the association based on estimated electrical usage. Otherwise you will need to install a metered outlet or charging station. If you install a charging station, you will need to comply with Davis-Stirling requirements:
•  Comply with the association's architectural standards.
•  Use a licensed contractor to install the station.
•  Within 14 days, provide a certificate of insurance.
•  Pay for electricity usage associated with the station.
See full explanation of the requirements.
MANDATORY PLUMBING
FIXTURE REPLACEMENT


In 2009, the Governor signed legislation requiring all noncompliant plumbing fixtures be replaced with water-conserving plumbing fixtures before January 1, 2019.

Noncompliant fixtures means any of the following: (i) toilets that use more than 1.6 gallons of water per flush; (ii) urinals that use more than one gallon of water per flush; (iii) showerheads with a flow of more than 2.5 gallons of water per minute and (iv) interior faucets that emit more than 2.2 gallons of water per minute.

RECOMMENDATION: Have a plumber inspect your common area plumbing fixtures to make sure they are compliance. Notify your owner of the requirement and help facilitate the use of a licensed and insured plumber to change out fixtures throughout your condominium complex.

GOVERNOR SIGNS
AB 2912


Assembly Bill 2912 was signed by the Governor. The bill is designed to prevent fraud and embezzlement in community associations. The bill was sponsored by the consumer advocate organization "California Legislative Action Committee" (CLAC) chaired by John MacDowell.

Fidelity Bond. The bill requires associations to purchase fidelity insurance in an amount equal to or exceeding current reserves, plus three months of assessments.

Fund Transfers. The bill prohibits transfers of funds greater than $10,000 or 5% of an association’s total combined reserve and operating account deposits, whichever is lower, without prior written approval from the board.

Financial Statements. The bill also requires board members to review financial statements monthly rather than quarterly and prohibits electronic transfers of association funds without board approval. Directors do not have to meet monthly, but managers will need to prepare and send financial statements monthly.

RECOMMENDATION: Since most associations are in their budget season, they should (if they haven't already) add a line item for fidelity insurance.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Call the Governor!

Sep 4, 2018 0 Views 0 Comments

SB 1265 (Wieckowski) is the anti-consumer bill sponsored by the Center for California Homeowner Association Law (CCHAL).

If passed, it will increase the cost of elections and jeopardize homeowner privacy. It prohibits homeowners from adopting standards for who can serve on their boards.

If the bill is signed by the Governor, you will be forced to accept felons, delinquents, those in violation of the CC&Rs, and litigants on your boards and give them access to homeowner records.

To SEND AN EMAIL to Gov. Brown to veto the bill, click the following link, and THEN click on "Contact Your Legislator Now" https://caiclac.com/current-campaigns/

Also, CALL THE GOVERNOR at 916-445-2841, choose option #6 to speak to a person, and then ask the staffer who picks up for a VETO on Senate Bill 1265. They will ask for you zip code. That's it. It only takes a few minutes to send an email and make the call.

ASSOCIATION FINANCES
AB 2912

Many of you have expressed frustration with the constant stream of bad legislation from Sacramento. Bad legislation is due in large part because those drafting and sponsoring it don’t understand associations or are biased against them.

CLAC. Fortunately, CAI’s California Legislative Action Committee (CLAC) has been working to defeat negative legislation or make it less bad. In addition, it sponsored Assembly Bill 2912 which seeks to protect association finances.

Common Sense Protection. Because homeowner associations are targets of fraud and embezzlement, the bill provides boards with guidance on common sense protection of their finances.

AB 2912, introduced by Assembly Member Jacqui Irwin, requires simple measures to protect association finances. It will:

• require fidelity bond insurance in an amount equal to or exceeding current reserves, plus three months of assessments;

• require a monthly review of financial statements rather than quarterly; and

• prohibit electronic transfers of funds without board approval.

Boards are not required to meet monthly to review financials. They can designate a board member or board members to review the financials monthly and ratify them at their next meeting.

Support. Protecting association finances is critically important. AB 2912 passed out of the Assembly and is making its way through the Senate (next stop is the Senate Judiciary Committee). For more information about AB 2912, or to find out how you can support AB 2912, check out CLAC’s recently renovated website as well as the Davis-Stirling website for new laws.

Thank you to Nathan McGuire, Vice Chair of CLAC, for this legislative update.

DIRECTOR/REALTOR
ESCROW DISCLOSURES


QUESTION: I am a real estate agent and currently have a listing of a condo. The title of this condo is under my husband's name and is in a family trust that involves me. Both my husband and I are board members.

We are aware of the repairs needed to be done in this complex that could cost nearly $4 million, and the reserve budget is only $1 million. Hence, future special assessments. Are we to disclose all this to potential buyers? As a licensed real estate agent, I would like to make sure I am doing the right thing and am not being deceitful to the buyer.

ANSWER: In real estate it's all about location, location, location. There is a second, lesser known imperative: disclose, disclose, disclose.

Potential Exposure. You and your husband have double exposure. You have special knowledge as board members and you have fiduciary obligations as Realtors. Put yourself in the shoes of young first-time buyers sinking their last penny into buying a condominium. Would it be important to them to learn the association was badly under-reserved and likely faced a large special assessment?

Jury Sympathy. Withholding information from the young couple could get you sued. A jury would not be sympathetic that you steered the couple into buying a condominium they would lose as soon as an assessment dropped into their laps.

RECOMMENDATION: Realtors on boards face disclosure dilemmas--which is why they should either step off the board or not list and sell units in the association while on the board. If you stay on the board, you should steer fellow directors into raising the dues to increase funding of the reserves and clearly explain to the membership the underfunding problem. It puts the association on the path of healthy finances and reduces your exposure as directors.


SB 1265. The author of the response to the question on black water was outstanding; Clear, complete, succinct, and valuable, as the author went on to advise as to what to do in an emergency.

Too bad such a clear message was not available regarding SB 1265. You failed to state that passage of SB 1265 will disallow open nominations for election to the board, permit the cancellation of future elections for a board, and remove fiscal control of the HOA from the owners and give it to a partnership of a self-perpetuating, unelected board and the property manager. -Marilyn H.

RESPONSE: Thank you for the kudos on the black water article. Regarding the train wreck known as SB 1265, you must have missed my newsletters where I discussed the bill at length in main articles and the Feedback section on June 3, 2018; June 10, 2018; June 17, 2018; July 8, 2018; July 22, 2018; August 5, 2018; and August 19, 2018.

The bill sponsored by the Center for California Homeowner Association Law (CCHAL) takes away your right as homeowners to regulate who sits on your board. CCHAL found a willing accomplice in Sen. Wieckowski to force you to accept felons, delinquents and litigants on your boards of directors.

CCHAL managed to push their bill through the Assembly and Senate. It now sits on Gov. Brown's desk awaiting signature. Hence, our request that everyone immediately write and call Governor Brown and ask him to VETO this dreadful bill.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Sukkahs in the Common Areas

Aug 23, 2018 0 Views 0 Comments

QUESTION: Can someone build a sukkah in the common areas?

ANSWER: Before answering, I should describe a sukkah for readers.

Sukkah Defined. A sukkah is a hut used by religious Jews to symbolize the temporary dwellings Israelites lived in during their forty years of wandering in the desert before reaching the promised land. Sukkahs are used during the week-long holiday of Sukkot (the Feast of Tabernacles or Festival of Booths) for prayer, reading the Torah, taking meals, and sleeping.

Common Area Restrictions. Since most CC&Rs prohibit temporary structures, alterations to the common areas, and nuisances, a sukkah would violate the CC&Rs. Constitutional guarantees of religious freedoms do not override CC&R restrictions--the guarantees protect against governmental interference not private restrictions. Accordingly, there is no constitutional right to build sukkahs in the common areas.

Exclusive Use Common Area. What about balconies and patios? Under the U.S. Fair Housing Act, the California Fair Employment and Housing Act, and the Unruh Civil Rights Act, associations cannot discriminate in housing based on one’s religion. It is very likely associations would be required to reasonably accommodate a request to temporarily erect sukkahs on exclusive use balconies and patios.

Case Law. There are no California cases on this issue but there are two out of New York. Even though out-of-state cases have no authority in California courts, they can be instructive. Both cases involved an Orthodox Jew, Robert Greenberg, who sued his condominium association over his sukkah.

In the first case, Greenberg built a sukkah in the common areas. In the litigation that followed, the court sided with the association. It found that a sukkah in the common areas violated the CC&Rs. The court commented that Greenberg could satisfy his religious obligations by using a sukkah erected by friends or relatives.

Eight years later, Greenberg erected a sukkah on his balcony. The association again intervened and litigation again followed. This time, the court sided with Greenberg because his sukkah was on exclusive use common area.
(Greenberg v. Parkridge.)

RECOMMENDATION: This year, Sukkot is celebrated from sunset Sunday, September 23 to sunset Sunday, September 30. Boards should allow Jewish families to erect sukkahs on their exclusive use common area balconies and patios. Associations can regulate sukkahs by limiting their construction to the start of the holiday and require their removal the day after the holiday ends. Boards can also require they be constructed in such a manner as to not damage the common areas.

Thank you to my partner Jasmine Hale for researching this article.

IDR, WHO’S IN
WHO’S OUT?

QUESTION: Can members bring witnesses or any other support persons to an IDR "meet and confer" with the board?

 

ANSWER: Owners and associations are each allowed to bring one person to an internal dispute resolution (IDR) meeting. That means witnesses (plural) and other people cannot attend--only one person of the owner's choosing.

 

IDR Defined. The Davis-Stirling Act establishes a default procedure where owners and board members can informally resolve problems. (Civ. Code §5910.) If an owner makes the request, the board designates a director to attend the meeting. If the board requests IDR, an owner is not required to attend. If the parties enter into a written agreement during IDR, it can bind the parties so long as the designated board member has authority or it is later ratified by the board.

 

Lawyer Can Attend. What started as a sensible approach to getting owners and boards together to solve problems has, thanks to AB 1738, morphed into a more formal and sometimes adversarial undertaking. The bill, which took effect January 1, 2015 authorized each side to bring their lawyer to IDR. That means an owner can bring a lawyer, or a witness, or a support person. The owner has to decide which one of the three would be most useful in the IDR meeting.

 

RECOMMENDATION: Associations should adopt a clear IDR policy which describes how owners can best identify their issues and proposed solutions and informs owners the association is represented by counsel so they don’t bring their attorney unannounced. Doing so eliminates surprises and enhances the potential for a productive meeting to resolve problems.

Another thank you to Jasmine Hale, for answering this question.
 


Kudos?? I get these updates monthly. Some are more interesting than others. -Barbara W.

RESPONSE: That's odd; my assistant assured me they were all brilliant.

*****


Contaminated water #1. In your article on the black water leak, the management company did their job, and this one director wants to challenge their actions and refuse to pay the bill? I don’t get why he fails to understand the association's duties in an emergency. It seems like this director does not understand his own basic duties. -Tony V.

RESPONSE: The association, through its board of directors, has a duty to immediately clean-up a sewage spill affecting common areas (including common areas surrounding units). It also has a duty to pay the company that performed the work, even if the manager did not seek bids or get prior approval. The board should thank the manager for moving quickly to mitigate the damage. His initiative saved the association from a more costly clean-up and possible lawsuit.

Contaminated water #2. Wow!!! Black water clean-up obviously didn’t affect that director's unit. Otherwise, his would have been first on the list to be cleaned up! Too bad there is always one board member who should not be serving on a board. -Steven C.

RESPONSE: Maybe no one sat him down and explained his duties as a director. Some directors have the mistaken belief that their primary duty is to not spend money. Their primary duty is maintaining the common areas. There is an apt British saying about being penny wise and pound foolish. (The pound referred to is British currency.)

Contaminated Water #3. In general, I agree with your thoughts on what the management company did. However, doesn't the manager have the president's phone number? I would hope he would contact that person (or another board members if not the president), to explain the severity of the problem and then contact a vendor. -Bob F.

RESPONSE: Yes, managers should immediately notify their boards of any common area floods and their actions to mitigate damage.

*****


SB 1265 #1. Love that picture...VERY funny train wreck. -Ted A.

RESPONSE: The wreck occurred in Paris in 1895. Because the engineer was running late, he sped his locomotive into the station to make up for lost time. He had 131 passengers on board when the brakes either failed or were applied too late.

The train traveled 100 feet through the station, broke through a cement wall and plunged 33 feet to the street below. The only fatality was a woman on the street. The engineer was fined 50 francs (~8 dollars).

SB 1265 #2. I support SB 1265; it's about time we get rid of criminals destroying our lives and our life investments and peace of mind. -Heidi P.

RESPONSE: Your comments are counterintuitive. Do you mean replace existing board members with convicted felons, delinquents and litigants? How does that help you? SB 1265 takes away your right to regulate who sits on your board.

I encourage everyone to immediately email their Senator to "Vote No on SB 1265" by clicking here: https://caiclac.com/current-campaigns/. The train wreck of a bill will soon be up for a vote in the senate and needs to be stopped.

*****


Donations & Fundraisers. Contributions to an association would be taxable income. HOAs are supposed to be non-profits, right? -Hank J.

RESPONSE: Yes, contributions and fund raisers could be taxable. An association's CPA/tax preparer will have to decide if the monies are revenue or contributions to capital.

*****


Recording Board Meetings. On your website, under "Recording Unruly Meetings" it says that "Because board meetings are public forums, the board does not need the permission of attendees to videotape them." However in another page of your website, it says: RECORDING MEETINGS Neither individual board members nor attendees at a board meeting have the "right" to electronically record board meetings. Open Meeting Act. Association meetings are not public gatherings."

In one place it says they are public and in another place it says they are not public. So which is it? I'm confused. We have an association member that insists on audio-recording our meetings. -Bob G.

RESPONSE: It is a bit confusing. Board meetings are not public meetings in the sense that the general public can attend them. They are, however, "public meetings" for members.

Because board meetings are the board's meetings, boards can establish rules for the conduct of their meetings. That means they can disallow members from recording their meetings. In the alternative, boards can choose to record and/or broadcast their meetings. Because board meetings are considered public forums within the association, the board does not need the permission of attendees if it decides to record/broadcast meetings.

The reverse is not true. Attendees cannot record the meetings without the board's permission. Attendees can observe the meeting and can address the board during open forum but must follow rules established by the board--no disruptions of the meeting, no recordings, etc. If the board were to allow members to record meetings, permission would not be needed from other attendees since the meetings are deemed public forums within the association.

Just as judges have discretion to allow or not allow recording in their court rooms, boards have the same discretion. Bottom line: If your board adopts a policy of not recording meetings, attendees must put away their cell phones and any other recording devices they might have.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Contaminated Water Clean-Up

Aug 5, 2018 0 Views 0 Comments


QUESTION: We had a black water leak affecting multiple units and our management company hired a remediation company to clean up the mess without first getting an estimate or board approval. As a board member, I do not want to pay for the clean-up since we did not authorize the work. How should we handle it?

ANSWER: Before answering your question, I should define "black water" for readers. There are three categories of water when it comes to building maintenance, clean, gray and black:

Clean water is what comes from your faucet and shower and is drinkable. Clean water lines are under pressure, which means a flood from a water line can quickly cause a lot of damage. Failure to clean-up the water and dry out wall cavities can lead to mold, which is expensive to remediate.

Gray water is waste water that comes from sinks, washing machines, and bathtubs. It contains soap and low-level contaminants. Gray water floods can occur from separated drain lines or backups if the lines become clogged. These lines can clog if people put potato peels, pasta, rice, etc. down garbage disposals.

Black water (also called sewage) is wastewater from toilets that contains fecal matter and urine. It carries high levels of bacteria that can cause diseases such as hepatitis and dysentery. Backups can occur from items being flushed down toilets such as diapers, sanitary pads, etc. If the clog is in a line at the bottom of a stack, the amount of sewage flowing into a unit from other units higher up in the stack can be significant.

Clean-Up. Whenever floods occur in condominiums, they invariably involve common areas and other units. Associations are obligated by the Davis-Stirling Act and their CC&Rs to maintain, repair and replace the common areas. That means associations must move quickly to remove all water from carpets, floors and walls and clean any contaminated areas if gray or black water is involved.

Management. Because these are emergency situations, it should be a standing policy for management to immediately call a plumber to stop the flooding and a remediation company to extract water and dry out walls. Bidding is not necessary. From your question, it sounds like the manager acted properly. If he had not, you would have faced a much larger bill and possible litigation. That means your board should pay the remediation company. If you don't and the company sues, I have no doubt you will lose.

RECOMMENDATION: Whenever floods occur, immediately fix the leak and clean everything. Simultaneously notify insurance of the loss. Then determine fault and, if appropriate, levy a reimbursement assessment to pay the insurance deductible (assuming you have a policy regarding deductibles). See Water Damage Checklist.

VOTE NO
ON SB 1265


The following is an appeal from the California Legislative Action Committee (CLAC) to stop SB 1265 as it now heads to the Senate for a vote. This is the anti-consumer legislation that takes away your right to set standards for who serves on your board of directors. -Adrian

We strongly believe that SB 1265 strikes at the heart of our association’s ability to self-govern by mandating how we conduct community association elections.

SB 1265 threatens the privacy of residents, will drastically increase costs for our associations and will suppress voter participation.

SB 1265 would prohibit our associations from establishing qualifications for an individual to be a candidate for the board. As amended, SB 1265 would disqualify any individual who in the past 20 years has been convicted of a felony for embezzlement, check fraud, etc. However, SB 1265 would not allow our association to bar an individual who has failed to pay their assessment from running for the board. Associations have a fiduciary responsibility to the members and legal responsibilities established by the Corporations Code, which could be violated if an individual is elected to the board is in arrears to the association.

It’s time to STOP a one-size fits all approach to association governance. Here are two ways YOU can help:

1.  Send a letter to your Senator simply by clicking here: https://caiclac.com/current-campaigns/

2.  Join @CAICLAC for our first-ever Twitter Chat on Wednesday, August 8th at 12p.m. -1p.m. PST to make your voice heard!


For more information visit www.caiclac.com or contact us at [email protected]. (Also, see my earlier newsletter articles about the SB 1265 train wreck.)

CYBERSECURITY AFFECTS
ASSOCIATIONS

It's no surprise that technology is taking over every aspect of the business world. This includes homeowner associations.

Thieves that used to break into a business to steal valuables by picking locks or climbing through windows, now hack into computer systems. As a result, cybersecurity and cyber insurance are increasingly important.

In 2018, the Foundation for Community Association Research (FCAR) surveyed more than 600 managers, board members, and professionals to identify the risks and liabilities associated with using technology to conduct association business.

According to the Foundation’s research, 92% report that their associations use computer programs and that ransomware and phishing are the most common forms of attack on community associations. More than half reported that fraud and theft are their top concerns.

To learn more, see 2018 Survey of Cybersecurity in Community Associations.

HELPING MANAGEMENT
COMPANIES


Cat Carmichael has been serving the community association profession for three decades, both as a management company executive and as a banker handling mergers, acquisitions, and succession planning.

Cat currently serves on the Board of Trustees of the Community Associations Institute and is President Elect for 2018 and will be President in 2019.

I learned from Cat that she launched a company called "Strategy 123" which provides consulting services to management company CEOs--advising them on mergers, acquisitions, succession planning and improving operational efficiency.

Congratulations to Cat for providing a valuable service to the industry. To send congratulations or ask questions, email [email protected].


Train Wreck. Isn't it time to mount a campaign to get rid of CCHAL & Sen. Wieckowski? For years, they have proposed and advocated harmful revisions to the Davis-Stirling Act that do nothing more than usurp the rights of association members. -Julian M.

RESPONSE: I better not respond--it would probably get me in trouble.

Donations: Can a 55+ community accept donations from a wealthy member? Also, can the association do a fundraiser to boost reserve funds? -Dianne K.

RESPONSE: Yes, you can do both. Associations can accept donations of cash or property. Also, the donor can restrict the gift to a specific purpose. Treasury Regulations 1.118-1 addresses the topic of contributions to the capital of a corporation. The most important sentence of that ruling is underlined. A fundraiser for boosting reserves is also acceptable. Drop me a line and let me know if your fundraiser is successful.

Thank you to Gary Porter, CPA for his assistance with this question.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Fundraising in the Common Areas

Jul 8, 2018 0 Views 0 Comments


QUESTION: As we enter another election cycle, do you think the new law allowing politicians to use the common areas permits a candidate for public office to raise funds using our common areas?

ANSWER: It's a good question with no clear answer. SB 407 went into effect January 1 this year and no one knows yet the reach of the statute. It states that members or residents can invite "public officials, candidates for public office, or representatives of homeowner organizations to meet with members, residents, and their invitees or guests and speak on matters of public interest." (Civ. Code §4515(b)(2).)

Fundraising Free Speech? A recent US Supreme Court decision (McCutcheon vs. Federal Election Commission) held that donating to a political campaign is an exercise of free speech. Does that make fundraising a matter of public interest? Maybe. Clearly, a court will have final say (unless the legislature clarifies it by amending the statute).

Political Parties. In addition to the Republican and Democratic parties, there is a long list of other parties who could use your common areas to campaign. Following are some:

America First Party (paleoconservatism)
American Indep. Party (strict constitutionalism)
America's Party (Christian conservatism)
American Delta Party (social progressivism)
American Freedom Party (white nationalism)
American Populist Party (libertarianism)
American Solidarity Party (Christian democracy)
Black Riders Liberation Party (black nationalism)
Christian Liberty Party (dominionism)
Citizens Party of the U.S. (centrism)
Communist Party (communism)
Workers Party of America (communism)
Constitution Party (fiscal conservatism)
Freedom Socialist Party Trotskyism
Green Party (environmental socialism)
Humane Party (animal rights)
Independent American Party (paleoconservatism)
Justice Party (social democracy)
Legal Marijuana Now Party (marijuana legalization)
Libertarian Party (libertarianism)
Modern Whig Party (centrism)
National Socialist Movement (neo-Nazi socialist)
Natural Law Party (peace through meditation)
New Black Panther Party (black nationalism)
Objectivist Party (objectivism)
Party for Socialism and Liberation (communism)
Peace and Freedom Party (democratic socialism)
Prohibition Party (temperance)
Reform Party (electoral reform)
Socialist Action (Trotskyism)
Socialist Alternative (Trotskyism)
Socialist Equality Party (Trotskyism)
Socialist Party (socialism, anti-capitalist)
Traditionalist Worker Party (neo-Nazism)
U.S. Marijuana Party (marijuana legalization)
U.S. Pacifist Party (pacifism)
Unity Party of America (centrism)
Veterans Party of America (centrism)
Workers World Party (Communism)

If any of the above parties (and many more not listed) were invited by a resident to use your common areas to speak and raise money (free of charge and without insurance), they probably could.

RECOMMENDATION: Boards should talk to legal counsel about how best to handle this situation should it be raised in their association. Following is another question about SB 407.

PASSED BY
SCALAWAGS


QUESTION: Hello - As I have tried to read all the newsletters that are sent out, I thank you on keeping the people abreast who want to be engaged. For this one item that was passed by scalawags, SB 407, how can it be overturned?

RESPONSE: For readers unfamiliar with scalawags, it's a legal term that does not get used enough. It means scamp, reprobate, someone who behaves badly, a lying no good rascal. It’s also spelled scaliwag and scallywag.

Public Interest.
Unfortunately, SB 407 is here to stay. Politicians want access to community associations so they can campaign for office. They gave themselves (and it seems everyone else in the world via the "public interest" provision) access to your common areas free of charge and without insurance. The poorly worded, expansive bill by Sen Wieckowski will likely remain as-is until litigation erupts over unintended consequences and the statute (maybe) gets tweaked.

HOA's RIGHT TO RESPOND TO
ACCUSATIONS


A recent unpublished case involves a homeowner, Robert Kulick, who published a newsletter accusing board members at Leisure Village in Ventura County of lying and cheating, the general manager of perjury, and the association's attorney of extortion and hate mongering.

He also claimed the board election was rigged and the association would be forced into bankruptcy.


Association Responded. At the board's request, the association's attorney prepared a letter responding to Kulick's newsletter denying that board members were cheats or liars or that the association's attorneys engaged in unlawful conduct. The letter described Kulick's newsletter as a reckless communication that contained unfounded, inaccurate and spiteful allegations. The association distributed its letter to its 2,100 members.

Litigation Ensued. Kulick sued the association claiming he had been defamed by the letter. When his lawsuit was dismissed on an anti-SLAPP motion, he appealed. The court of appeal upheld the trial court's ruling because the content of the association's letter was of public interest regarding a controversy initiated by Kulick when he published newsletters accusing directors, management and attorneys of misdeeds.

OBSERVATION. Homeowners who distribute scurrilous material should not be surprised when someone disputes their allegations and makes a few of their own. To read the case, see Kulick v. Leisure Village.

WEBSITE
CASE LAW UPDATE


In addition to laws passed each year by California's legislature, our courts of appeal and supreme court add "case law" by interpreting statutes.

We have approximately 300 cases on Davis-Stirling.com which are indexed alphabetically by name.

I am pleased to announce the addition of a new page to the website that organizes cases into categories and summarizes the relevant holding of each case. We hope you like it. If there are cases you think should be on our list, drop me a line.

A special thanks to attorneys Wayne Louvier and Aaron Schwarzkopf for assisting me on this project.

SANTA BARBARA
OFFICE OPENS


I am pleased to announce the opening of an ADAMS|STIRLING office in Santa Barbara.

Our office is located at 831 State Street, which is within walking distance of the historic Santa Barbara courthouse.

We represent a large number of clients in Ventura, Santa Barbara and points north. Our new office allows us to work more closely with our growing base of coastal clients.

HIRING. We are continuing to hire attorneys. To learn more, contact me.


AB 2912 #1. Why should any association insure their reserves plus three months of assessments? According to the Davis-Stirling Act associations are not supposed to assess more than the costs for which they are collected. Any association that has three months of assessments in their account(s) must be over-charging their members or not paying their bills. Sounds like legislation backed by insurance companies. -Tamara B.

RESPONSE: The reason for insuring your association's money is because it can be embezzled. I've worked with many associations over the years who have had their funds stolen--some in the millions. In most cases, they were able to recoup their loss through their insurance. Three months of assessments sets a minimum amount stolen by an embezzler. It does not have to be done all at once, it can be done over time.

Fidelity insurance is relatively cheap and not having it could result in a large special assessment to replace embezzled funds. Members get a little touchy when that happens. They start demanding resignations, threaten recalls, and sometimes threaten to sue directors who "allowed" the embezzlement to occur and negligently (or intentionally) failed to ensure the funds.

*****


Rental Prohibitions. I find your newsletter to be very informative and entertaining. Your June 17th newsletter item about grandfathered rules raised the following question in my mind: Does Civil Code 4740 apply to an amendment restricting only short-term rentals? -Mark B.

RESPONSE: It applies to rent prohibitions. I do not believe a requirement that rentals be at least 30 days is a prohibition. Rentals are still allowed, they just can't be less than 30 days. Such restrictions have have been deemed reasonable by the courts. (Mission Shores v. Pheil.)

*****


Far Away #1. I wanted to say how much I appreciated—and laughed at!—your response to Gregg G.’s outrageous diatribe likening HOAs to concentration camps: "You might cut back on coffee and consider moving to a cabin far away from civilization. Far, far away.” What a perfect response!

As you know far better than I do, not everyone who lives in an HOA is reasonable and rational, and because people can’t be reasoned out of anything they haven’t been reasoned into, your response didn’t try to do the impossible, but simply and calmly offered two very practical and helpful suggestions. Bravo! -Scribner M.

Far Away #2. I always try to read your informative newsletter promptly. Today’s was helpful until I reached the outrageous and vicious item by Gregg C. I have immense pity for his neighbors/owners who are exposed to him, as well as for the association’s board of directors. He must live a miserable life since he’s lost touch with reality. You probably gave all your readers a wake-up call! -Marilyn B.

WIECKOWSKI BILL NULLIFYING
OWNER RIGHTS ADVANCES


SB 1265 is the bill put forward by the Center for California Homeowner Association Law (CCHAL) and Sen. Wieckowski that strips homeowners of their right to adopt reasonable qualifications for board members. CCHAL and Sen. Wieckowski decided you should accept felons and delinquents on your boards as well as those suing your association and those in serious violation of the CC&Rs.

The hearing before the Assembly Housing Committee on June 20 did not go well. The bill passed on a party line vote. It then went to the Assembly Judiciary Committee on July 3 where it again passed on a party line vote. It will be eligible for a vote on the Assembly floor when the legislature returns from summer recess in August.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Train Wreck Update

Jun 17, 2018 0 Views 0 Comments

SB 1265 is set to be heard by the Assembly Housing Committee this Wednesday, June 20 in the State Capitol building at 9:00 a.m. in Room 126. If you can attend and voice opposition to the bill, please do so.

Emails opposing Wieckowski's legislation were forwarded to the committee. Following are a few from this week. -Adrian

Train Wreck #1. Thank you very much for the information you presented. I originally voted for the bill, but I see now that I was wrong. I am opposing SB 1265. I own several properties in HOA communities and am a member of and have served on many boards over the past 40 years. Thank you. -Delores L.

Train Wreck #2. Calling out Sen. Wieckowski as being associated with CCHAL (Center for California Homeowner Association Law) is right on. He was also behind SB 407. Unfortunately, he was just re-elected to State Senate District 10. We can probably expect more ill-conceived bills. -Paul C.

RESPONSE: For those who don't remember, SB 407 was last year's bill allowing politicians of every stripe, both elected and un-elected, to take over common areas (free of charge and without insurance) to speak and hold rallies.

Train Wreck #3. Your article last week said litigants should not serve on the board. I sued my association 5 years ago and won because they failed to repair a water leak. Does that mean I can never serve on the board? That does not seem fair. -Pat M.

RESPONSE: You can serve on the board. You would make a good director based on your experience. Someone who is in active litigation against the association should not simultaneously be on the board. The conflict of interest creates too many complications. It is better for the person to be off the board until the litigation has concluded. As soon as the litigation is over, the person would be eligible to serve on the board. This common sense provision is prohibited by the CCHAL/Wieckowski bill.

Train Wreck #4. I read a newsletter from the Center for California Homeowner Association Law (CCHAL) and thought SB 1265 seemed good. After reading your newsletter I've changed my mind. It made me wonder about the latest CCHAL newsletter I received regarding AB 2912. CCHAL's 'NO' position seems sensible but I thought their 'YES' on SB 1265 seemed sensible too. What do you have to say about AB 2912? -Janice S.


RESPONSE: I asked Nathan McGuire, Vice-Chair of the California Legislative Action Committee, for his analysis of Assembly Bill 2912. Following is his response:

"Many owners have expressed frustration with the constant stream of bad legislation coming out of Sacramento in the last decade. This is in large part because those drafting and sponsoring legislation don’t understand community associations or are biased against them.

For the most part, groups like CAI’s California Legislative Action Committee (CLAC) have been playing defense, working to defeat bad legislation or make it less bad. As a proactive measure, CLAC sponsored Assembly Bill 2912, which seeks to protect association finances.

Unfortunately, homeowner associations are occasionally targets of fraud or embezzlement. Boards can take steps to prevent fraud, but not all boards have the guidance to implement sufficient measures.

Introduced by Assemblymember Jacqui Irwin, the bill would require associations to implement simple measures to prevent fraud with clear guidelines on the handling of association funds.

Most of the requirements are already standard practices for many associations. If passed, the bill would:

  • Require fidelity bond insurance in an amount not less than current reserves, plus three months of assessments;
  • Require monthly review of financial statements rather than quarterly; and
  • Prohibit electronic transfers of funds without board approval.

Boards are not required to meet monthly to review financials. They can designate a board member or board members to review the financials monthly and ratify the financials at their next meeting.

Support. We support AB 2912. Protecting association finances is of critical importance. The bill has passed out of the Assembly and is making its way through the Senate. The next stop is the Senate Judiciary Committee. For more information, check out CLAC’s recently renovated website." -Nathan McGuire, California Legislative Action Committee

NOTE: I agree with Nathan's recommendation. Safeguarding association finances makes sense. I have not seen CCHAL's opposition to the bill but I'm not surprised. They seem to be on the wrong side of most issues. -Adrian Adams

DEALING WITH
PROBLEM BOARDS


Problem Boards. I don't think last week's question about problem boards was fully answered. -Ann R.

RESPONSE: Having worked with boards for over 30 years, There are five types of boards. They almost always fall into one of the following categories:

1. Bad Boards
2. Dysfunctional Boards
3. Marginal Boards
4. Good Boards
5. Exceptional Boards

Bad Boards. Fortunately, truly bad boards are few in number. They tend to be self-serving and driven by personal agendas. It has been my experience they don't follow legal advice and I eventually withdraw from representation (a polite way of saying I fire them). Once their path of destruction is visible to everyone, they usually get sued or thrown out of office, or both. A good board is then elected to clean up the mess.

Dysfunctional Boards. Dysfunctional boards consist of directors who are at each other's throats. Nothing gets done because they are too busy fighting each other. There are strong personalities on differing sides of every issue and they are unyielding in their opinions. Sometimes they hate each other and engage in personal attacks. Each side develops a following and splits the community. Feelings run deep and it takes years to recover from the strife. Fortunately, dysfunctional boards are also few in number.

Marginal Boards. There are a fair number of marginal boards. Their directors serve because no one else will. They put in their time and try to avoid difficult decisions. They minimize rule enforcement and avoid spending money. They rationalize that doing nothing keeps dues down. Many owners get frustrated with such boards but not enough to volunteer their own time to serve on the board. It's not until some crisis hits that more qualified volunteers step up.

Good Boards. Most boards are good boards. They volunteer their time, address community issues, and generally make good decisions. They enforce the rules, repair the common areas, and fund the reserves. However, they can be slow to act and sometimes make mistakes. Even so, they care about the membership and their intentions are good.

Exceptional Boards. Exceptional boards are not the norm. Being on top of everything all the time, consistently communicating with members, responding quickly to complaints and never making mistakes is not sustainable. I've worked with many such boards over the years but the demands on their time and constant criticism from a minority of perpetually unhappy owners eventually wears them down.

All five categories have their detractors. Unhappiness with bad, dysfunctional and marginal boards is fully justified.
If members have such boards, they should do something about it. See ten steps for dealing with bad boards.

Complaints about good and exceptional boards is most often from owners who don't like rules. They go ballistic when the board enforces rules against them. Too often they engage in whisper campaigns against directors and threaten lawsuits. They run up the association's legal bills and bully people until they get what they want. They complain endlessly about their "bad" board while directors struggle to bring the scofflaw into line.

COMMENT:
Complaining seems to be part of the human condition. When someone says they have a bad board, I dig a little deeper to see which category the board falls into and then respond accordingly.

Concentration Camp HOAs. As I read newsletters from Adams Stirling, it is clear to me that your firm is hell-bent on making HOAs pretty much like concentration camps. Deny all possible rights of members and give absolute power to a small group of volunteers who can behave in any manner they see fit without accountability or repercussions.

If A&S were honest, they would admit that HOAs are established by corrupt politicians in their own corrupt image, basically their bastard step-children. Give all the power to a small group of people so they can rule the masses. To even suggest that they are "angels" is complete stupidity. -Gregg G.

RESPONSE: You might cut back on coffee and consider moving to a cabin far away from civilization. Far, far away.

DISCRIMINATION LAWSUIT
DISCLOSURES


I received a number of questions about the lawsuit over large dogs on elevators I reported last week. Readers asked about litigation disclosures. Here is one of them:

QUESTION. Regarding informing members of the details of a lawsuit, I assume you mean that members have a right to know what the issues are but not specific legal advice given to the board or anything falling under attorney-client privilege. -Shelly D.


RESPONSE: You're right, attorneys and boards can talk to members about the litigation but not about legal advice given or received. Members are naturally curious about ongoing litigation, and boards can and should inform them about the case. Members often push for details but directors should stick to what's a matter of public record, i.e., in papers filed with the court. Directors should not talk about litigation strategy or settlement strategy. Such things have a way of getting back to the other side.

NANCY SIDORUK


Following are a few of the many emails we received about Nancy joining the firm.

Congratulations #1. Wow!!! That’s wonderful news!! Nancy is WONDERFUL!!! -Jeremy W.

Congratulations #2. Congrats on Nancy joining your team. She's so good! Please give her my best. -Skip. D.

Congratulations #3. Wow! -Rosy A.

Congratulations #4. Nancy is my favorite attorney! She is easy to work with and extremely knowledgeable. Congratulations! -Linda L.

*****


HIRING. We are still looking for experienced litigation and HOA attorneys for Riverside, Palm Desert and San Francisco's South Bay. If you are interested, contact me. -Adrian

*****


Grandfathered Rules? I have a bet with another homeowner. He states that if you bought your home prior to revisions to the CC&Rs or rules that you are grandfathered under the old rules. New or changed rules that affect your separate interest do not apply. -David J.

RESPONSE: If you said new rules apply to everyone, you win the bet. In a unanimous decision in Villa de Las Palmas v. Terifaj the California Supreme Court ruled that CC&R amendments apply to all owners, regardless of when they purchased their units. Rules, like CC&R amendments, apply to everyone unless the board grandfathers existing conditions. The exception is rent prohibitions. Civil Code §4740 exempts owners from rent prohibitions unless the prohibition was in effect prior to the date the owner bought into the development.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Large Dogs & Reasonable Accommodation

Jun 9, 2018 0 Views 0 Comments

Sometimes a demand for reasonable accommodation is unreasonable.

Large Dogs. Holly Geraci owned a penthouse in a Chicago highrise. She claimed to have a fear of large dogs because she was attacked by a German shepherd as a child and suffered post traumatic stress disorder (PTSD).

Lawsuit Filed. Residents in the highrise had large dogs that accompanied them on the elevators. Geraci demanded the association provide her with an elevator that prohibited large dogs. When the board declined her request, she sued in federal court.
At trial, the jury did not believe Geraci's fear of large dogs met the definition of disability and found for the association.

Geraci Appealed. On appeal, Geraci objected to testimony by the association's psychiatrist that contradicted her doctor's diagnosis of PTSD. She also claimed that publishing litigation updates to the membership and holding an open forum about the lawsuit was retaliatory and designed to cause her emotional distress and embarrassment.

Association's Rights. The federal court of appeals disagreed on both points. Geraci had the burden of proving she was handicapped and the association had the right to defend itself by disproving her alleged mental impairment.

In addition, the board had the right to tell members about the litigation. No federal law prevents members from knowing why their association is bearing legal costs. It should be expected that members would want to know the details of the lawsuit. The court noted that sending litigation updates and holding open forums to update members on litigation are reasonable measures.

OBSERVATION: Force all other residents to keep their dogs off the elevators? Sue the association and demand the board not tell members? Object to the association defending itself in court? The case injects some common sense into growing demands related to claims of disability. Read Geraci v. Union Square Condominium Assn.

CHECKS AND
BALANCES


QUESTION: I'm curious about the Davis-Stirling Act. Why are there few, if any provisions with penalties when a board does not comply? Seems as if there are no checks and balances.

ANSWER: Good question and given the current political discourse, it allows for a brief reminder on our government’s system of checks and balances.

If Men Were Angels. The idea of checks and balances is to ensure that no one branch of government becomes too powerful. As James Madison wrote in the Federalist Papers No. 51 arguing for the adoption of the system in the Constitution, “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.”

While some disputes in homeowner associations seem like arguments over how many angels can dance on the head of a pin, the law does provide checks on potential abuses by boards of homeowner associations. (And if only angels served on boards, there would be no need for checks on abuses or HOA attorneys for that matter).

Accountability. Although a system of checks and balances does not perfectly square in the homeowner association context as there are not separate branches of governance within such communities, the idea of political accountability built into the system is embedded in homeowner associations.

For example, the Davis-Stirling Act requires election rules that, among other things, allows members access to common area to advocate points of view not endorsed by the board and access to association media under certain circumstances. (Civ. Code §5105.)

There is also the Open Meeting Act under the Davis-Stirling Act (Civ. Code §49004955) for procedures on how boards are to conduct their meetings with the intent of transparency and accountability.

Under California’s Corporations Code (§7110 et seq.), there are provisions on director qualifications (now under assault by CCHAL and Sen. Wieckowski--see below), removing unqualified directors, conflicts of interest, among others checks on a board’s conduct. There is also a board’s fiduciary duty to act in the best interest of the members. And, of course, boards can be recalled.


So while some believe “power tends to corrupt, and absolute power corrupts absolutely,” rest assured the ideals of the Founding Fathers can be found in the laws that govern homeowner association boards.

Thank you to partner Cang Le, head of our firm's litigation department, for answering this question.

NANCY I. SIDORUK
JOINS ADAMS|STIRLING


I am pleased to announce that senior attorney Nancy Sidoruk; joined our firm.

Nancy is a seasoned community association attorney who serves as general counsel to residential, mixed-use, and commercial common interest developments.

Nancy is actively involved in educating association managers and volunteer leaders, and addressing community association legislative issues. She served as President of the Community Associations Institute's Inland Empire chapter; was a delegate to the California Legislative Action Committee and served on its Executive Committee. Known for her focus on education, Nancy is a frequent author and speaker and recipient of many industry awards.

Nancy earned her Bachelor of Arts in Political Science from UC Berkeley, earned a Masters in Business Administration from the University of Redlands, and a Juris Doctorate from the University of La Verne College of Law where she was law review editor-in-chief, moot court finalist and served a judicial externship with the California Court of Appeal.

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

HIRING LAWYERS
IN NORTHERN CALIFORNIA


We are looking for experienced HOA attorneys for clients in the South Bay.

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

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


I received ~600 emails opposing SB 1265 and 4 in favor. Below are a few from readers who disagreed with me or had questions. -Adrian

Train Wreck #1. Your article about SB 1265 is in error. You said it lets felons on the board. I read the bill and it specifically excludes felons from serving on the board. -M.B.

RESPONSE: If you take a closer look at the bill and my article, you will notice I referenced sex offender felons and the bill talks about financial felons.

People Behind the Bill. The bill is sponsored by the Center for California Homeowner Association Law (CCHAL), an organization in Sacramento that seems particularly hostile to community associations. Over the years, they sponsored a lot of harmful legislation and this is another piece.

How to Sue HOAs. In addition to bad legislation, CCHAL holds classes teaching lawyers and homeowners how to sue associations. I attended one because I had a hard time believing an organization would promote litigation over reconciliation. Unfortunately, they really are teaching people how to sue associations. For some reason, Sen. Wieckowski has associated himself with this group.


Negating Rights. The bill put forward by CCHAL and Sen. Wieckowski strips consumers (homeowners) of their right to adopt reasonable qualifications for board members. In their original bill, they forced homeowners to accept all felons as board members.

Partial Retreat. Their ill-conceived bill was so reckless that CCHAL and Sen. Wieckowski were forced to revise it. They made a partial retreat by amending the bill so homeowners could exclude financial felons. You, as consumers, would still be required to accept all other felons, including those who commit violent and/or sexual crimes. Thus, if directors discover a felon pedophile was elected to the board, they could not vacate the seat. Once elected, that director would then have access to the association's records.

Destructive Bill. It is perplexing that CCHAL and Sen. Wieckowski think they have the right to impose their will on 9 million consumers, stripping them of their right to exclude felons and delinquents from serving on homeowner boards.


Legal Analysis. Curt Sproul, well respected co-author of Advising California Common Interest Communities published by the Continuing Education of the Bar (CEB), did an excellent analysis of the flawed legislation which he sent to the Assembly Housing Committee. His letter urging opposition to SB 1265 is worth a read.

Train Wreck #2. I think there is misinformation in your newsletter that should be corrected. You state “For some unfathomable reason, Sen. Wiechowski believes owners not in good standing should serve on association boards of directors.” I’ve read and re-read SB1265 and it certainly appears to specifically exclude members who have not paid their assessments. -Bruce U.

RESPONSE: CCHAL and Sen. Wieckowski made a concession on assessments but only as to regular assessments. An owner can refuse to pay special assessments, be in violation of architectural standards, have multiple unpaid fines, be suing the association, and still be on the board if CCHAL has its way.


With low turnout and cumulative voting, a problem owner's friends can put him on the board. Someone who is in violation of the CC&Rs, refusing to pay a special assessment and suing the association creates significant legal challenges for the association. Such individuals have major conflicts of interest. Putting them on the board is not in the membership's best interest.

Train Wreck #3. Your newsletter mentioned privacy issues. What do director qualifications have to do with privacy? -Nancy L.

RESPONSE: In addition to giving felons, delinquents and scofflaws access to association records as board members, CCHAL and Sen. Wieckowski decided to amend section 5200 of the Civil Code to include email addresses in membership lists. If you ask the association to email notices to you, your email address gets added to the membership list, which is then accessible by all your neighbors.

An email blast from a homeowner to the membership means your email address can make its way to unexpected places and into the hands of people who are not members of the association. Giving out your email address should be your decision, not Sen. Wieckowski's.


RECOMMENDATION: The bill is a train wreck. There is nothing redeeming in it. CCHAL and Sen. Wieckowski are taking away your rights as homeowners. As consumers, you currently have the right to set reasonable standards for who serves on your homeowner board. They are taking that away from you.

If this bill passes, CCHAL and Sen. Wieckowski will be forcing you to allow felons, delinquents, litigants, and members not in good standing into positions of authority over you and giving them access to homeowner records. This bill needs to be defeated.

Anyone who has not yet sent an email opposing this dreadful legislation should do so now. Talk to your friends and neighbors and get them to send emails as well.

Please email Chairman David Chiu urging his Committee to "Vote No" on SB 1265. Send your emails to: [email protected]. Our office will print and deliver them to the committee.

*****


Book Clubs. Regarding your Bible study ban story, the legislature passed SB 407 last year which allows political gatherings. Does it apply to Bible studies? -Mike S.

ANSWER: Maybe. The relevant provision in the bill (now Civ. Code §4515), states that associations "may not prohibit a member or resident... [from] peacefully assembling... for purposes relating to common interest development living..."

Bible studies are generally peaceful and usually focus on how one should live. Will a court interpret this to fall under "common interest development living"? I don't know. What is clear, though, is prohibiting a book club because it focuses on religious text is discriminatory in violation of the Unruh Act and FEHA.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

SB 1265 Train Wreck

Jun 3, 2018 0 Views 0 Comments

QUESTION: I read SB 1265. What prompted such a complex bill? HOAs as "quasi-governmental entities?" Retaining signed envelopes of voter ballots? Seems like overkill to me. Our association has had annual elections without difficulty, mishaps or problems. It is hard enough to get people to run for the board without telling them they will be operating in a "quasi-governmental" atmosphere. What do you think of the bill?

ANSWER: The bill is a train wreck. It voids director qualifications adopted by associations. That means a felon sex offender who is suing his association to stop foreclosure of his unit can be elected to the board of directors to serve alongside his spouse and adult son on a five-director board.

This overreaching piece of legislation was authored by Sen. Bob Wieckowski (Freemont) and affects every association in the state.
For some unfathomable reason, Sen. Wiechowski believes owners not in good standing should serve on association boards of directors.

Identity Theft. In addition to voiding director qualifications, the bill allows members to inspect and copy signed envelopes. Members concerned about identity theft now have to be concerned about their signatures being copied and posted on the internet. It also unnecessarily exposes members to breaches of their privacy.

RECOMMENDATION: This bill is awful. SB 1265 will be heard in the Assembly Housing and Community Development Committee most likely on Wednesday, June 13. Please send a letter or email to Chairman David Chiu urging his Committee to oppose the bill. You can send your emails to [email protected]. Our office will bundle and deliver them to the Committee.
 
MY SECONDARY ADDRESS:
@EMAIL ME?

QUESTION: I’m an owner who lives part of the year in Europe. I requested my HOA mail all notices to my secondary address, my email. The board told me they aren’t bound to send notices and disclosures via email. Isn’t my HOA obligated to mail notices to my designated secondary address, even if it’s an email?

ANSWER: You are correct. Civil Code §4040(b) requires an association, upon request from a member, to provide notices to the “secondary address identified in the request.” The Civil Code does not specify what type of address must be provided, so it stands to reason an owner can designate an email address in lieu of a physical address.

Email Notice is Allowed. Civil Code §4040 is clear if any part of the Davis-Stirling Act requires individual notice, an association can accomplish delivery by mail (U.S. or overnight) or by email, fax, or other electronic means so long as the owner consented in writing to receive the notice through the particular method. If a request to use an email as a secondary address is in writing, it is valid for individual notices to be sent.

Types of Notices. Associations are obligated to provide owners the following records, including by email: annual budget report, the annual policy statement, notices of regular and special assessments, and notices of foreclosure. Not all notices must be sent via individual delivery. Associations can deliver the following types of records through general delivery (which can include posting a physical copy of it at a designated location in the association): board meeting notices, rule changes, election and vote tabulation results, and use of reserve funds.

RECOMMENDATION: Civil Code §4045 permits owners to request all general notices also be delivered to them by individual delivery. Submit your request in writing to designate your email as your secondary address (make sure it complies with all the requirements) and also request individual delivery of all general notices so you can continue to be kept abreast while you’re abroad.

Thank you to partner Jasmine Hale in our Los Angeles office for this article.

ASSOCIATION BANS
BIBLE STUDY
 
Several years ago a reader asked about banning Bible studies in the clubhouse. I responded it would be discriminatory and the restriction would likely be struck down if challenged.
 
Clubhouse Activities. Last week, a 55+ homeowners association settled a lawsuit over this issue. The association had allowed members to reserve rooms at its 8,000 square-foot clubhouse for activities such as book clubs, card games, Bible studies, arts & crafts, etc. They had over 30 clubs and interest groups using their common area facilities.
 
Atheist Objects. An atheist objected to Bible studies in the clubhouse and threatened to sue the association. In response, the board banned all religious or faith-based groups from using the common areas.
 
Litigation Erupts. Affected members contacted the Pacific Justice Institute, a nonprofit legal organization that defends religious freedoms and civil liberties. They sued the association for violation of the Unruh Civil Rights Act and the Fair Employment and Housing Act for denying access to the common areas on the basis of religion. In addition to injunctive relief, members sought punitive damages against the association and its directors.
 
Settlement. The association sought to have the complaint dismissed or at least dismiss punitive damages. The judge refused and trial was scheduled for this month. The parties went into mediation and the association agreed to a number of concessions, including giving faith-based groups equal access to common area facilities.
 
RECOMMENDATION: Associations cannot engage in discrimination and expect a successful outcome. State and federal laws are quite clear in their prohibition of discrimination. Boards should have legal counsel review their policies to ensure they are non-discriminatory. In addition, boards should adopt an anti-harassment policy.


Stickers #1. Twenty years ago the local chamber of commerce was looking for a way to ban window flyers as they created a lot of trash in parking lots. The solution was ADA. The ordinance (Los Angeles) bans putting anything on the front or rear window of a vehicle as it may obstruct the view of the driver and disabled person may not be able to remove them. It does permit such items to be put on the side windows. I think this would apply to those stickers. -James S.

Stickers #2. It can be very dangerous if the sticker is stuck to the center of the front windshield and blocks the view of the driver. Several years ago, the owner of a stickered car windshield, wanted to file a lawsuit against the HOA for blocking his ability to drive his car in a safe manner. He had no way to get the sticker off the glass and thus could not drive his car safely. It caused financial loss. He wanted money to pay for his taxi and time lost. The HOA now puts stickers in the lower left hand corner of both the windshield and driver's side door window. Also don’t damage car paint....What would you do..... pay or not? - Nancy S. Love your newsletters.

RESPONSE: If an association were negligent in how it applied the sticker and damaged an owner's car, I have a good idea how a court would rule. I recommend against putting stickers on the front or rear windshields. They should be put on the driver's side door window--or better yet, driver's side rear door window.

Stickers #3. Stickers on car windows. An automobile is private property just as your residence. I would consider a sticker placed on my window vandalism. Can you slap a sticker on the front door of a house if they have a violation? No, you send them a notice. Same should hold true if a car is parked in violation. Thank you. -Gary S.

RESPONSE: Cars are treated differently than houses. Houses aren't illegally parked in fire lanes, block other cars. block fire hydrants, and aren't subject to towing like cars. Stickers seem to be an effective deterrent for bad behavior.

*****


Proof of Ownership. Since a property deed need not be recorded, to be valid, we amended our CC&Rs to require deeds be recorded in order to be used as ownership proof, and we barred those fun family sized "land contracts" that some use to skirt the rules. -Laurence A.

RESPONSE:
Whenever we restate documents, we routinely include a provision that deeds must be recorded to establish membership in the association. It makes it easier to verify qualifications for election to the board as well as other issues.

Adrian J. Adams, Esq.

Boards should contact us for friendly, professional advice.

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

Managers at Meetings

May 20, 2018 0 Views 0 Comments

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

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

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

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

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

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

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

Thank you to attorney Nate McGuire for answering this question.

PROOF
OF OWNERSHIP

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

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

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

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

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

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

Thank you to attorney Nate McGuire for answering this question.

HIRING LAWYERS


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

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

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

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

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

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

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

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


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

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

*****


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

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

*****


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

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

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

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

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


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

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

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

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

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

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

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

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

The Digital Elite

May 6, 2018 0 Views 0 Comments

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

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

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

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

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

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

WEEKLY LIST OF
WHO HASN’T VOTED

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

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

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

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

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

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

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

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

Thank you to attorney Laurie Poole for this article.


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

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


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

JAMIE HANDRICK


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

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

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

TRUCK RESTRICTIONS


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

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


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

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


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

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

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

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

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

Realtors in Board Meetings

Apr 29, 2018 0 Views 0 Comments

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

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

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

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

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

POWER OF ATTORNEY


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

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

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

BANNING TRUCKS


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

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

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

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

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

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

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

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

JAMIE L. HANDRICK
JOINS ADAMS|STIRLING


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

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

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

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


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

San Diego. Jamie joins our team of lawyers in San Diego under our newest partner, Laurie Poole. Jamie will work out of our San Diego office in Mission Valley. We are very happy to have such a talented and experienced attorney in our firm.

If your association needs legal services, 
contact us for a proposal.


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

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

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


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

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

*****


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

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

*****
 

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

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

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

Confidential Letters

Mar 18, 2018 0 Views 0 Comments

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

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

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

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

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

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

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

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

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

THREATENED LAWSUIT
DISQUALIFIES CANDIDATE?


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

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

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

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


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

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

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


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

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


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

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

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

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

*****

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

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

*****

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

Adrian J. Adams, Esq.

Boards should contact us for friendly and professional legal advice.

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

Unnecessary Assessment

Mar 4, 2018 0 Views 0 Comments

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

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

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

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

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

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

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

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

RENTING ROOMS
FOR BOARD MEETINGS


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

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

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

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


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

OWNERS ON
PROPERTY WALKS


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

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

Meeting Defined. Including two directors in the manager's inspection does not turn it into a board meeting. Board meetings are defined by the Davis-Stirling Act as a gathering of a majority of directors at the same time and place to "hear, discuss, or deliberate upon any item of business that is within the authority of the board." (Civ. Code §4090.) Two directors accompanying the manager on her property inspection does not constitute a board meeting.

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

LAURIE POOLE
JOINS ADAMS STIRLING
AS PARTNER


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

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

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

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

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

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

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

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

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

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

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

HOA Beekeeping

Feb 18, 2018 0 Views 0 Comments

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

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

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

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

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

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

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

PORTABLE
CAR CHARGER


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

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

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

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

CHANGES IN
MOBILEHOME RESIDENCY LAW


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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Adrian J. Adams, Esq.

Boards can contact us for friendly and professional legal advice.

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