No Due Process

QUESTION: Our pool usage was revoked without any due process and nothing in writing. I went to use the pool one day and couldn’t get in. The president said we were banned as long as he was president and we were lucky we weren’t fined. I asked for a fine schedule but he couldn’t produce one. He said it depended on what the board saw fit for the offense. I mentioned the Davis-Stirling Act and he said it was nothing but a guideline. He said our CC&Rs are the law. Help!

ANSWER: Ah, where to start?

The Law. First, the Davis-Stirling Act is not just a guideline, it’s the law. It encompasses Civil Code sections 4000 through 6150. Violations by the board can result in lawsuits, fines, court orders and an award of attorneys’ fees. Second, your CC&Rs are not the law, they are recorded restrictions known as equitable servitudes. CC&Rs are high on the food chain but they’re a full step below the law.

Due Process. It’s entirely possible your family violated the rules, are a pain in everyone’s rear end, and deserve to have their privileges suspended. However, before any penalties can be imposed, the law requires that you first be given 10 days written notice of the violation and a hearing date so you can defend yourselves. Once the board hears the evidence and makes a decision, it has 15 days to give you its written decision.

Fine Policy. Finally, the board cannot create penalties on the fly. The board must comply with the association’s written fine policy (which must be published annually). If they don’t have a fine schedule, they can’t levy fines or suspend privileges.

RECOMMENDATION: If you’re violating the rules, you should stop. If your board is not following the law, they should start.

DEAD TREES

QUESTION: We are a small HOA in central California. With the drought, we look down at our proud brown grass and up at our trees which we hope to preserve. Several owners have giant redwood trees in their back yards. Should we address these tall trees which could fall onto our homes? Is this a board issue or an insurance issue?

ANSWER: Good grief–don’t wait for it to become an insurance issue. If trees topple, you could have dead or injured homeowners as well as significant property damage. Surviving family members will file costly lawsuits that could easily exceed your insurance limits and result in hefty special assessments.

Water Your Trees. If trees are not watered, they will become stressed and subject to insect attacks, disease and death. Despite Governor Brown’s executive order and subsequent legislation about not watering lawns, people should water their trees. If mature trees die, they’re extremely expensive to replace (not to mention the small issue of death and destruction when they fall).

RECOMMENDATION: Even though you can’t fine owners “for reducing or eliminating the watering of vegetation or lawns” (Civ. Code §4735(c)), a lawyer-letter may be sufficient to get owners to water their trees. If someone is too short-sighted to comply and his trees die, you can force him to remove them–which is far more expensive than simply watering them.

RENTER
VOTING RIGHTS

QUESTION: We have a board member that’s a renter. Our bylaws allow it but they don’t allow non-members to vote. So what do we do–keep him as a director but don’t let him vote?

ANSWER
: Your voting restriction likely deals with membership elections. That means your renter can’t vote to elect or remove directors. He can, however, run for the board and, if elected, vote in board meetings because he’s voting as a director not a member.

RECOMMENDATION: To restrict directors to members only, you need to amend your bylaws.

GATHERINGS, MEETINGS
AND WHATNOT


QUESTION
: If a meeting of homeowners and board members is called something other than a board meeting, such as a gathering or a town hall meeting, do the same rules apply?

ANSWER: It depends. If everyone gets together for a prayer meeting or a barbecue and directors don’t hear or discuss business, then it’s just a prayer meeting/barbecue and no rules apply.

Other Meetings. A town hall meeting is a little different. Such meetings are defined as informal membership meetings to discuss a particular issue. Other than giving notice of the meeting and posting an agenda of the items to be discussed, nothing more needs to be done. If a quorum of directors will be in attendance then at least four-day’s notice must be given.

Board Vote. If the board intends to vote on business at your assemblage/forum/whatnot, then it’s a gathering coupled with a board meeting and appropriate notice must be given.

Membership Vote. If the membership were to vote at your gathering/summit/congregation of homeowners, it depends on the nature of the vote. If it’s an informal advisory vote to give the board direction on a particular matter, it’s still an informal gathering and nothing special need be done–members can vote by a show of hands or a voice vote. If the members are expected to formally make a decision on issues requiring secret balloting, then secret ballots are required with at least thirty day’s notice.

RECOMMENDATION: The more conservative approach is to always give appropriate written notice of meetings together with an agenda whenever the board or membership gets together to discuss association business. I even like printed agendas at prayer meetings so I know what I’m praying for.

FEEDBACK

Dead Turf #1. If an owner turns off the irrigation to the HOA’s landscape in front of his home and causes it to die, can he be held liable for the restoration of said landscaping? -D.G.

RESPONSE: Yes he can. Owners have no right to tamper with landscaping maintained by the HOA. Turning off the irrigation falls into the category of “vandalism” and subjects the person to fines and costs of repair.

Dead Turf #2. Medium and larger associations should consider having arrangements with their vendors to make available to the owners acceptable plant material at wholesale or marginally above. This eases the burden on those owners who want to remove turf and install drought tolerant landscaping. Vendors may be willing to do weekend presentations to members on the available materials that will enhance the owners property while meeting the new HOA guidelines and standards. Such programs may also be helpful to make owners switching to drought tolerant material more knowledgeable about how best to successfully install and maintain their new landscaping. -Rich N.

Dead Turf #3. I recently sold my townhome in Covina and moved to a home in La Quinta. The comment about grass bouncing back with just a little water is misleading. Recovery of a lawn may not be possible if the roots are allowed to die. If that is the situation then it’s probably a good time to consider landscaping options such as drought tolerant plants and colored rock ground covering or bark chips. People in California need to accept the fact that changes in landscaping are necessary because of the extended drought. They can’t just ignore the situation or wish the drought away. -John A.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Weeds & Dead Lawns

QUESTION: I know we are in a drought but what can we do when owners let their lawns die and weeds grow?

ANSWER: Normally, you would hold hearings and fine members. But with the current drought emergency, your options are limited.

Weeds. You still have the power to require the removal of dead plants and weeds. This is consistent with another statute, Civil Code §4750(e), which allows an association to require the removal of dead plant material and weeds from personal gardens.

Dead Lawns. Dead lawns are another matter. Because of the drought emergency, boards cannot fine owners for reducing or eliminating the watering of lawns during any period for which the governor or local government has declared a drought emergency. (Civ. Code §4735.)

Lawn Replacement. Can HOAs force the removal of dead turf and require its replacement with different landscaping? Probably not. Even when a lawn turns brown and looks dead, most will bounce back when watered. If an association were to order the removal of turf and the installation of new landscaping (under penalty of fines), a judge could deem it contrary to the anti-fining statute and rule against the association.

RECOMMENDATION: Associations should adopt landscape standards that describe the types of low-water plants allowed as well as permissible alternatives, such as hardscapes, wood chips, crushed rock, etc. Doing so establishes new aesthetic standards for the community. As more people remove their lawns and install drought tolerant landscaping, members with dead lawns may be more inclined to remove dead turf and re-landscape. Once the drought is over, associations can take a more direct approach to the problem.

Thank you to attorney Wayne Louvier in our Orange County office for his assistance with this question.

REESTABLISHING
PET RESTRICTIONS


Last month the court of appeals handed down an unpublished decision showing that associations can reestablish restrictions where previously there had been lax enforcement.

The CC&Rs of Villas in Whispering Palms restricts members to one dog per unit. Over the years, boards had granted variances so owners could have multiple dogs.

In 2003, the board decided it would no longer allow multiple dogs. It notified members that those who already had more than one dog would be grandfathered. However, once a dog died, it could not be replaced.


From that point forward, pet restrictions were strictly enforced and disciplinary actions were taken against violators in 2008 and 2009 which resulted in four homeowners giving up one of their two dogs.

In 2011, Richard Tempkin bought a second dog. The Villas sent him violation letters and met with him in an attempt to resolve the matter. When that failed, fines were levied. Finally, the Villas had no choice but to sue Tempkin.

Tempkin defended by alleging (i) bad faith by the board, (ii) arbitrary and capricious enforcement, and (iii) lack of due process. The court deemed his arguments unpersuasive and ruled for the association. Tempkin appealed.

The court of appeals reviewed the case and found no merit in Tempkin’s arguments. The court held that the board’s enforcement of the dog restriction, despite years of granting variances, was reasonable and entitled to judicial deference. The court noted that once the board decided to strictly enforce the rule, it was done uniformly. (See Villas in Whispering Palms v. Tempkin.)

Kudos to attorney Anne Rauch and her team at Epsten Grinnell & Howell for their fine work on this case.

MARIANNE PICK
JOINS ADAMS KESSLER


I am pleased to announce the hiring of Marianne Pick as Director of Business Development.

With the firm’s continued growth in the Orange County and San Diego markets, Marianne will be managing business development and client relations in these regions. Marianne comes to the firm with 12 years of experience in the Southern California HOA industry. Her work with boards and managers over the years has given her great insight into the challenges they face.

Marianne will team with Sue Anderson and Nathalie Ross Weinstein to assist boards and managers. Sue was recently hired for the Riverside and Coachella Valley regions. Nathalie will be heading the team with her recent promotion to Vice President of Business Development at Adams Kessler. Together, they will enhance our firm’s legal services and client satisfaction by ensuring timely delivery of quality legal products to our clients.

To congratulate Marianne or to learn more about our legal services, contact her by email or by phone at (800) 464-2817.

HIRING LAWYERS

I am hiring lawyers for my Los Angeles, Orange County and Inland Empire offices. If you are interested, please contact me by email.

Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Building Permits

QUESTION: Our CC&Rs state the Architectural Control Committee may require a person submitting plans to obtain approval of governmental agencies. Is there a legal obligation for our association to do this and what are the dangers and legal ramifications to the association if it does not?

ANSWER: There is no obligation that your architectural committee demand proof that owners obtain building permits since the language in your CC&Rs is permissive rather than mandatory. Despite the language, homeowners have an independent obligation to obtain permits. Policing that obligation falls to the city or county in which the association is located.

Good Practice. Even so, many condominium associations require proof of a building permit before an owner’s remodel/construction can proceed. The reason is that construction in a condominium impacts common areas. Requiring a permit as part of the architectural approval process means the association can have a reasonable expectation that any alterations to the common areas will comply with building codes.

RECOMMENDATION: Every association should have written architectural standards with approval procedures. In addition, boards should seriously consider using a remodeling agreement (drafted by HOA legal counsel). Approval of architectural applications can be conditioned on the owner signing the agreement which obligates him to: (i) obtain a building permit, (ii) use licensed and insured contractors, (iii) not deviate from plans without approval, (iv) follow the rules, and (v) other requirements as may be appropriate. In addition, any significant alterations to the common areas should require a recorded covenant obligating the owner to maintain those alterations.

SWIMMING POOL
“GUESTS”

QUESTION: A renter today allowed his cleaning crew of three woman to bring 11 children, teens and adults to our community pool. Yes, they had a key. They were in the pool for three hours including feeding everyone lunch. The renter was not there since he goes to work at 7 a.m. and comes home after 8 p.m. What liabilities go along with this activity? Can we do anything?

ANSWER: Yes, there is plenty you can do. Neither the owner nor his tenant has the right to allow vendors, contractors, or domestic help (plus families and friends) to use the association’s facilities.

Liability. The potential liability is the same as if members used the pool, i.e., injuries and/or drownings that result in lawsuits. However, the chance for injuries increases with the number of children–especially if they are unsupervised. Another negative is the unhappiness of your members over strangers using the pool.

Rules & Regs. If you don’t already have pool rules, your board needs to adopt rules that: (i) the pool is for residents and guests only, (ii) guests must be accompanied by the resident, and (iii) guests are limited to three. The number of guests can vary from association to association so long as the limitation is reasonable. With rules in place, interlopers can be asked, politely, to vacate the pool area (or any other common area facility).

Rekey the Pool. In addition, the unauthorized “guests” can be required to surrender their key to the association. If they refuse, you should not get into a wrestling match with the person. Instead, you can rekey the facilities and charge the thoughtless owner for the expense (following a reimbursement hearing).

Hearing & Fines. You can also hold a disciplinary hearing with the owner and his tenant. If the board finds the tenant violated the rules, fines can be levied and pool privileges suspended for up to thirty days.

Discrimination. The real danger for associations is the drafting of the rules. Too many get themselves in trouble for discrimination against families with children. There are plenty of rights advocacy groups out there that will happily sue associations for discrimination. You want to make sure you’re not one of the suees.

RECOMMENDATION: Have legal counsel review your rules.

FEEDBACK

Newsletter #1. Adrian, you make my day with your humor. It is difficult being a board president and I appreciate all the smiles I can get! -Vickie B.

Newsletter #2. I am inspired, informed and stimulated every Sunday by your newsletter. Thank you so much for providing us with your knowledge and wisdom! -Denyse B.

Newsletter #3. I just want you to know I appreciate your weekly newsletter. The questions posed are interesting and make me aware of issues facing other groups. Keep up the good work! -Sammie B.

Newsletter #4. Loved, LOVED your joke about growing freeways via watering them! -Gary F.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Protecting Committees

QUESTION: I know that board members are legally protected but what about committee members (like a rules committee, newsletter committee, finance committee, etc.)? Are they also protected under the Civil and Corporations Code?

ANSWER: Unfortunately not. By statute, board members have a higher level of protection but the same is not true for committee members. They do, however, frequently have protections under the association’s governing documents and and its insurance policy.

Advisory Role. One way to reduce potential liability is to make sure your committees are advisory only. Without decisionmaking authority, they make a much smaller target. Two exceptions to advisory-only committees are executive and architectural committees. The first is made up entirely of directors and the second derives its authority from the governing documents. The surest way to protect all volunteers is for the association to purchase insurance to cover them.

RECOMMENDATION: Proper D&O Insurance is a must. Make sure your association’s policy covers committee members as well as board members. Adopt an ethics policy so committee members know what constitutes proper and improper behavior. And, adopt committee charters so members know they are advisory only. Finally, if your governing documents are silent about protections for committee members, you should consider amending your documents.

WHEN A
DIRECTOR SUES


QUESTION: Our HOA has only five owners and all owners are on the board. Can an owner, under the D&O coverage, sue the board for an issue as an individual owner? My thought is that you can’t sue yourself, yet they wear two hats…board member and homeowner.

ANSWER: Yes, a director can sue his association. Your D&O insurance may deny coverage but it does not prevent him from suing.

Suing Himself. You’re right that, as a practical matter, your fellow director is suing himself when he sues the association. He can do it because, from a legal perspective, he is not suing himself. He is suing a separate legal entity–the association.

ADR. Before your unhappy director can sue, he must first determine if the governing documents require binding arbitration rather than litigation. If so, he must follow the governing documents. If your documents are silent, the plaintiff can go into court. Depending on what he seeks and why, the Davis-Stirling Act may require that he first endeavor to submit the dispute to alternative dispute resolution.

Recusal. During the litigation, the plaintiff director must recuse himself from any discussions or votes related to his lawsuit. If he refuses, the board can form an executive committee (minus the plaintiff) to work with the association’s attorney on the lawsuit. If the governing documents prohibit a director from serving while in litigation with the association, the board can vacate his seat.

Insurance. A consideration for the plaintiff is that the association’s insurance may refuse to defend. Some insurance policies exclude coverage if one director sues another director. D&O insurance is designed to protect directors from third-party claims, not infighting between directors or claims against current or former directors for imprudent business practices. This is known as an “Insured vs. Insured” exclusion.

Special Assessment. If the carrier denies coverage, the membership could be specially assessed to raise the funds needed to defend against the action. If that happens, the plaintiff may find himself an outcast. He should be careful about pooing where he eats.

RECOMMENDATION: The board should avoid litigation and make every effort to work out their differences.

Thank you to Mike Rey of the Mike Rey Insurance Agency for his input on this issue.

FEEDBACK

Droughts make people do funny things. As Mark Twain observed, “Whiskey’s for fightin’…water’s for killin’.” Let’s hope we don’t have any of either as HOAs deal with the drought. Following are a few more comments from readers.

Water Bills #1. Our docs allow the board to implement water saving measures, which could mean installing individual water meters per unit. Unfortunately, most multiplexes have several water line entry points into the unit–one for kitchens, another for bathrooms, etc. Thus, a single meter isn’t possible. I think the state needs to mandate that all new multiplexes being built have a separate meter for each unit. -Joseph L.

Water Bills #2. Our association had water meters put in at each townhouse which seems the fair way to go. We pay for our own water usage. -Suzy P.

RESPONSE: Fortunately, townhouse construction has a single line entering the unit. In your case, submetering makes sense. As noted by Joseph L., it may be impossible to retrofit condominium complexes with submeters.

Water Bills #3. Great drought map link. Thanks. -Scott C.

Water Bills #4. (Concerning the fairness of billing owners for their water usage by the number of residents in each unit…) The elderly lady may not use the pool but she still pays for it. -Don H.

RESPONSE: True. But the pool enhances her property values and she and her guests can use it if they choose to. Moreover, her assessments are not increased by the number of people using the pool whereas the number of people living in a unit directly affects water usage (and monthly dues).

*****

Drought. I noticed the freeways were being watered. -Suzy P.

RESPONSE: You shouldn’t be critical of the state–they are trying to grow more freeways.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Allocating Water Bills

QUESTION: I rented my condo to a family of six--two adults and four children. The HOA now wants owners to pay for water based on the number of occupants rather than equally as is currently done. Can the HOA legally require me to pay for water based on the number of occupants?

ANSWER: In light of the drought and the unequal usage created by a unit full of renters, allocating expenses based on usage has two advantages for the association: fairness and conservation.

Fairness
. On the equity side, why should an elderly widow who lives alone subsidize water for a unit with six renters–especially when the landlord is making money on the rental? The more equitable approach is for each owner to pay their own share of water usage.

Conservation. Making owners pay based on usage also creates an incentive to conserve water. Owners will use less water when the money flowing out of their pocket is tied to the water flowing out of their faucet.

It Depends. Whether the association can change its billing practice depends on its governing documents. If the CC&Rs clearly require that the cost of water must be shared equally regardless of usage, the association must amend its documents before it can change its billing.

Renters. If the CC&Rs are silent on the issue, the association bill owners based on estimated usage. In Watts v. Oak Shores, the court of appeals supported the association’s authority to allocate cost. Watts was a landlord whose renters increased the association’s expenses. The board estimated those costs and assessed Watts. Watts sued and lost. He then appealed and lost. (He has now petitioned the Supreme Court–we don’t know yet whether the court will hear his petition.)

Reasonable Allocation. I believe the principles delineated in the Watts decision have a broader application than just renters. If an association is master metered, it could estimate water usage based on the number of people living in a unit. The court of appeals wrote that:

Nothing in the language of [Civ. Code §5600(b)] requires the exact correlation between the fee assessed and the costs for which it is levied… In some instances, such an exact correlation may be impossible to obtain. In other instances, the costs of studies necessary to obtain an exact correlation may be prohibitive… The most reasonable interpretation of [Civ. Code §5600(b)] is that it requires nothing more than a reasonable good faith estimate of the amount of the fee necessary to defray the cost for which it is levied. (Watts v. Oak Shores.)

According to the California Water Resources Control Board, residential water use averages averages 77 gallons per person per day but ranges from 43 gallons to 427 gallons per person depending on the locale. A map of California published by the New York Times shows water usage around the state. An association could use such numbers to estimate water usage and levy appropriate charges.

RECOMMENDATION: Condominium associations should have legal counsel review their governing documents to see if they can bill owners based on water usage. If not, they need to amend their documents. If documents are silent or allow it, boards should contact their local water board for per person average water usage. In addition, boards should implement additional water conservation by addressing leaks inside owners’ units. For assistance, contact us.

Attorneys Russ Higgins and Steve Roseman will be speaking at an event hosted by the Channel Islands Chapter of CAI. They will cover creative approaches to handling:

  • Nuisances. What to do about noisy people and pets, smoking, estate sales, and a host of other complaints.
  • Remedies & Enforcement. Navigating through ADR/IDR, pros and cons of monitoring compliance, options for disciplinary actions and effective enforcement policies.
  • Board Meetings. From drinking during meetings to disruptive homeowners, how do you maintain order?
  • Q&A. There will be time for attendee legal questions.

The program is Thursday, June 11 from 6:00-7:15 p.m. at the Courtyard Marriott, 600 E. Esplanade Drive in Oxnard. Managers, board members & homeowners who are CAI members are FREE. Contact Executive Director Leah Ross for questions and to register.

HOA LAWYER

I am looking for a lawyer for my Temecula office. If you know a good candidate, please contact me by email or:

Adrian Adams, Managing Director
Adams Kessler PLC
2566 Overland Ave., Suite 730
Los Angeles, CA 90064
(800) 464-2817
FEEDBACK

A passing comment by a reader about escrow documents created quite a discussion the past few weeks. I am printing a few more comments and then stopping so we can move to other topics. Some of the feedback was quite lengthy and had to be edited down because of space limitations.

Escrow Documents #1. A property transaction requires not just disclosures but reams of follow on communications. We have one unit where we had to process over 85 communications despite having produced the most extensive disclosure known to the California HOA industry. On top of the disclosures, we are asked to produce lender certs, escrow demands, attorney letters-all sorts of data submittals, and always in a hot rush. Our managing agent charges $500 and spends about 8-10 hours for each transaction. Then they have to deal with all the “we are too busy to read anything for ourselves” from the “professionals” who call and e-mail for repetitive hand holding. This is no “scam;” this is a critically important service. -Laurence

Escrow Documents #2. Realtors may be stubborn (May 17th newsletter) but they are looking out for the seller’s best interest. Governing documents are amended over time and photocopied. Recently a seller provided his own copies rather than pay for them. Unfortunately, he was a missing page that limited the weight of pets. The buyer moved in and was cited for having a dog 13 pounds over weight. The matter was finally resolved in small court but ended up costing the seller more than what it would have cost to have the documents transferred professionally. -Rita S.

Escrow Documents #3. I have been a RE Broker for 36 years. Today’s transfer fees include many tasks that cost time and money–more than just providing documents. Besides providing the most current documents, someone has to answer lender questions, follow up with the title company, get a copy of the deed, answer realtor questions, change the HOA records and files, send correspondence to the new owner, prepare information regarding method of payment for new owner and various other tasks. All of this takes time and money. -Nancy S.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Runoff Election

QUESTION: In the event of a runoff between a sitting director and a non-director, is the latter required to attend the board meeting at which ballots of the runoff election are counted? If the outside director wins the election when does his term start?

ANSWER: Unless your bylaws require that a candidate be present when the results are announced (which I’ve never seen), he does not need to be present. If he wins, his term starts immediately unless your bylaws state otherwise.

ELECTIONS IN
SMALL ASSOCIATIONS

QUESTION: We are a small 6-unit condominium project. Each owner is a board member. Can we waive the secret ballot requirements for assessments and modifications to the governing documents?

ANSWER: The Davis-Stirling election requirements are particularly burdensome on small associations. There have been discussions in Sacramento about exempting small HOAs but, to date, that has not happened.

Informal Elections. Some small associations have taken matters in their own hands and unilaterally dispensed with the voting requirements. They get together each year in the living room of one of their units and, by consensus, declare all the owners elected to their respective seats. They do the same thing for assessments and amendments, i.e., decide such matters via voice votes. If someone wants secret ballots, they circulate slips of paper, write down their votes, fold the slips and pass them to the Secretary (or a spouse) to tally the results.

RECOMMENDATION: I can’t recommend the practice since it violates the Act. I’m simply reporting how some associations handle the problem.

EXECUTIVE MINUTES

QUESTION: Can a member appointed by the board act as recording secretary in executive session meetings?

ANSWER: There is nothing that would legally prohibit it. But as a practical matter, it would be more prudent to hire someone who does not live in the development. They would be less likely to gossip about what happens in executive session.

FEEDBACK

Escrow Documents #1. Our association posts its governing documents on its website. This is available publicly to Realtors or anyone else who wishes to view or download a copy. If requested, printed copies are provided by the manager for a fee based on costs. Since the documents are posted, Realtors seem satisfied with downloading. -Gordon C.

Escrow Documents #2. Escrow document charges are a scam! Our property manager created a very simple website. All governing documents (CC&Rs, amendments, condo plan, articles of incorporation, bylaws, rules and operating policies) are accessible online. When a property is listed, we give access to the listing agent and leave the responsibility of downloading and transmitting the documents to the agent and new buyer. There is absolutely no reason in this day and age for there to be a charge for this. If the lender wants another document filled out about occupancy, litigation and other stuff, our manager does this for $125. -Mike G

Escrow Documents #3. My management company averages 260 disclosure document requests a month asking for almost 1,200 documents. It takes time and money to process those requests. Using a third party allows us to reduce the cost about 25% from what it would otherwise cost to replace documents homeowners have misplaced. The average sales commission on a $750,000 home is $45,000 but realtors complain because the management company charges a few hundred dollars for the effort it takes to accommodate their request because they don’t “trust” the seller. If I were a homeowner and my realtor asked me to pay for something I already had and could provide for free, I would suggest they take it out of their commission. -Roy H.

Escrow #4. I noticed the feedback for escrow documents and wanted to chime in with my experience. Not only was I charged for email pdf copies (around $150-175) I was informed a printed physical copy was another $100!!! They didn’t even have copies of the prior full year of board meeting minutes! I contacted the property manager who kept insisting the 3rd party company had it all so I went back and had to complain twice to the 3rd party company because the property manager kept throwing it back at them. With this 3rd party BS everyone points the fingers at everyone else. That disconnection is a huge liability and disappointment considering what these “professional property management” companies charge. -Margot B.

**********

Trustees #1. I agree 100% with your response on trustees. The real problem is when, for example, the home is in the name of a spouse or a trust for the spouse and the other spouse wants to run for the board. He is clearly not an owner and most covenants only allow for an owner to run for the board. Our association amended its bylaws to alleviate this problem, however, no one thinks about this issue until it happens. -Paul M.

Trustees #2. In my trust where I am currently listed as sole trustee, I have my partner listed as successor trustee. In addition, I have a provision in the trust that states he is part owner (I list the percentage) of the condo unit that is recorded in the name of the trust. The HOA’s attorney stated that only I can act for the trust per the public documents. He said the association does not recognize ownership interests that are not part of the public record. Is that legal?

RESPONSE: The HOA has a smart attorney. I agree with him.

Trustee #3. It’s ironic that some people who are very vocal lack the legal knowledge in the specific area they are griping about. I always respond by asking them where they obtained their law degree. -John A.

Trustees #4. “Trustees are owners and have the right to vote and serve on the board.” How about a trustee who has a parent living in the unit but had an attorney write a letter stating the trustee authorizes the parent to vote for the trustee? Since the parent is not the owner of record, is this legal? -Phyllis J.

RESPONSE: Since the parent is not an owner, any attempt at proxy voting by the parent is void. By statute, a member can give their proxy only to another member. (Civ. Code §5130(a)(1).)


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Can Trustees Vote?

QUESTION: Our attorney said we cannot exclude owners who have their homes in a living trust from voting or being on the board. Unfortunately, one of our members has been raising quite a stir by insisting that trustees are not owners and so should not be allowed to vote or be on the board.

ANSWER: I suspect the homeowner who is raising a fuss does not have a law degree. If he does, he needs to go back to school. Your HOA attorney is right–trustees are owners and have the right to vote and serve on the board.

Estate Planning. A member who, for estate planning purposes, changes the title of his property from “John E. Smith” to “John E. Smith as Trustee of the John E. Smith Family Trust dated 1/1/15″ does not cease to be a member nor does he lose his membership rights and privileges. He is still the owner of his property and a member of the association.

AMENDING
COLLECTION POLICIES


QUESTION: Is an association legally required to amend their collection policy to address the appellate case Huntington v. Miner related to partial payment acceptance?

ANSWER: I asked my two collection attorneys, Richard Witkin and Wayne Louvier for their feedback on this one.

Reasons to Amend. There is no legal requirement that your collection policy be amended. Even so, any language in the policy which is inconsistent with the law should be amended, especially since it is within the control of the board to do so and (i) so as to avoid having uninformed directors or managers relying on unlawful provisions and (ii) to avoid being accused of misrepresenting the law.

Partial Payments. Another reason is to make sure current and future boards and managers know they must accept partial payments. Huntington Continental v. Miner specifically addressed this issue and ended the widespread practice of refusing partial payments when a lien is recorded or foreclosure initiated against a unit.

Restrictive Endorsements. Another caution involves partial payments containing restrictive endorsements like “deposit of this check constitutes acknowledgement that my account is paid in full.” Payments with restrictions should be returned to the owner with a request that the payment be re-submitted with the restriction deleted.

RECOMMENDATION. Even though there is no case or statute requiring the amending of collection policies, common sense dictates that policies be adjusted to comply with changes in the law. Accordingly, boards should have their policies reviewed by legal counsel.

ADAMS KESSLER OPENS
NEW OFFICE IN TEMECULA

I am pleased to announce the opening of our ninth office.

This one is in Temecula, the heart of Southern California’s wine country, hot air ballooning and large gated communities. Our address is:

ADAMS KESSLER PLC
41593 Winchester Rd., Suite 200
Temecula, CA 92590

HOA LAWYER
WANTED


I am expanding my legal team in the Inland Empire and need a bright, committed lawyer with at least five years experience.

I place a high value on legal analysis, writing skills and the ability to work with people. Litigation experience is a plus.

You will be working out of our Temecula office. Contact me by email or at:

Adrian Adams, Managing Director
Adams Kessler PLC
2566 Overland Avenue, Suite 730
Los Angeles, CA 90064

 

FEEDBACK

Escrow Documents #1. I am responding to a reader’s comment about agents insisting that documents come from the management company. I have been a realtor for 40 years and litigation has become very common especially if it concerns seller disclosures. Most owners do not keep all documents and if just one is missed, the buyer is at risk of being sued. We are not stubborn or trying to cost the seller money but are trying to protect the seller from a potential lawsuit. -Janis S.

Escrow Documents #2
. If I were a prospective buyer, how can I be guaranteed that the seller has up-to-date documents? They could have been revised. For a nominal $100 charge I would want the peace of mind of knowing that the documents are accurate, current, and complete. If the seller balks at such a trivial amount, I would be highly suspicious of the entire transaction. If I received the seller’s documents and later discovered they were not current and I subsequently suffered some sort of financial loss because I relied on obsolete information, I would be filing suit against the seller. -Hank J.

Escrow Documents #4. I am a Realtor and on the board of directors. I have a problem with how many management companies are using a third party to provide HOA documents to escrow. It works like this: Management Company emails documents to third party, third party emails all the documents to the escrow officer. Escrow then charges $100.00 to download and print the documents. Management company charges $150.00 for transfer fee. It all adds up and the seller pays $600.00 by time all is done. New civil code says management company must list costs for each document and use only the documents requested. I have had this happen on two transactions lately where we had all documents, except one which we had to get from this third party, and pay $350.00! -Joan S.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Drought Emergency & Reserves

QUESTION: In light of the drought emergency, can reserve funds be used for drought-friendly landscape renovations?

ANSWER: I checked with Robert Nordlund, President of Association Reserves, Inc. to see what he thought. Following is his response:

Existing Landscape Reserves. Many associations already have landscape-related projects in their reserve study, the most common being tree trimming. Many others have periodic landscape renovation projects to freshen up the appearance and health of their greenscape. If an association has a landscape renovation reserve component, those funds could be used for replanting and redesigning with drought-tolerant plants.

Borrowing. If they don’t have funds already set aside, another strategy is to borrow from reserves with these borrowed funds expected to be recouped by savings from lower water usage. While borrowed reserve funds must be repaid within twelve months, the following allows for the delay of repayment:

…the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration. (Civ. Code 5515(d).)

Savings. If you find that a $50,000 landscape renovation project would result in a projected $50,000 water savings over three years, and if your reserve balance can support the expense without delaying necessary reserve projects, an updated reserve study can provide the necessary documentation. The result is a zero-interest loan from reserves to implement the project.

Additional Points. Make sure the project meets your architectural requirements. You don’t want to replace grass in your greenbelts with artificial turf if you’ve been denying homeowner requests for similar projects in their front yards. If you are installing artificial turf (or something else that will need renovation or replacement), remember to add it to your reserve component list.

SUE ANDERSON
JOINS ADAMS KESSLER

I am pleased to announce that Sue Anderson has joined our firm as Director of Business Development.

Sue brings over sixteen years of experience in client development, quality control systems and client relations. She previously worked for a large agency handling Fortune 100 companies. This was followed by a position as Director of Business Development for the 4th largest security services company in the U.S.

Ms. Anderson’s many talents will be put to good use working with Nathalie Ross enhancing our firm’s quality controls and developing our growing array of legal services.

Sue earned her Bachelor of Arts degree from DePauw University in Indiana and is an active member of the Community Associations Institute and the Women’s Leaders Forum.

For more information about our legal services, contact Sue Anderson by email or by phone at (800) 464-2817.

FEEDBACK

Recall Petition. I think you overlooked something. If HOAs have yearly elections and terms in office are for 2 years and staggered and the recall affects board members not up for election, they would still be subject to recall as they would still have one year left to serve. If their term is up you would be correct and it is a waste of time. – Gary S.

RESPONSE: I considered those issues in my opinion. Even if only part of the board changes, it’s still a different board. At that point, if the membership is unhappy, they can submit a petition recalling some or all of the directors.

Escrow Documents. Most associations charge for copying and sending documents required by escrow because it takes time and there are some costs. A new law allows homeowners to submit documents in their possession. A lot of people don’t know this including the realtor who sold my townhome this year. He insisted I pay to have the management company prepare and send the documents even though I was on the board then and had most of the documents in my possession. My realtor finally agreed that it was within my right to submit what I had. Realtors tend to be stubborn. -John A.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Elections and Recalls

QUESTION: Less than sixty days before our annual meeting a group of homeowners submitted a petition to recall the existing board. As required by statute, the board gave notice of a special meeting. It will take place a month after the annual meeting. Under the circumstances, what is the effect of the petition?

ANSWER: In my opinion, it’s voided by the intervening election.

Pre-Election. Recall petitions submitted close to an annual meeting are the most ill-conceived kinds of petitions. The petitioners should have their heads examined. If a recall is held prior to the annual meeting and is successful, the new directors only fill the remaining terms of the ones they replaced. That means they may be up for reelection in thirty days. It’s a huge waste of time and money.

Post-Election. If the recall is scheduled to follow the annual meeting (as you described), the petition is no longer valid. The board for which the petition was submitted no longer exists. Even if the same directors are elected, it’s a new board with new terms in office. If the petitioners want to recall the newly elected board, they need to submit a new petition (and then explain why members should recall the board they just elected).

RECOMMENDATION: To avoid this kind of nonsense, associations should amend their election rules to put reasonable limits on recall petitions.

POINT OF ORDER

QUESTION: Our chairperson stated that the only time a homeowner can call a “point of order” is at the annual meeting. My understanding is that an owner can raise a point of order at board meetings if they know the board is not following parliamentary rules.

ANSWER: Sorry, I agree with your chair. You can’t interrupt the board’s meeting to raise a point of order.

Point of Order. For the uninitiated, a “point of order” is a parliamentary procedure issue. It can be raised whenever a member notices procedural rules aren’t being followed correctly. For example,

…point of order, the speaker’s time has expired.
…point of order, the speaker’s language is offensive.

…point of order, the motion conflicts with our bylaws.

The issue must be raised immediately by interrupting the chair, otherwise the right is waived.

Standing. The key is the definition of “member.” For board meetings, only directors are members of the board. Accordingly, only board members have standing to raise points of order in their meetings. A homeowner has no standing just as a citizen has no right to interrupt House proceedings in Congress with a point of order. They will be promptly escorted from the chamber if they do.

Membership Meetings. Homeowners can, however, participate in membership meetings and raise points of order. With the advent of secret balloting, that right is largely moot. Except to count ballots and announce the results, almost no business is conducted anymore at membership meetings.

ESCROW DOCUMENT
FEES

QUESTION: Is it a state law that the association charge new buyers for twelve months of minutes and all HOA docs?

ANSWER: State law does not require that associations charge document fees. Rather, it allows it. And most associations do. See escrow documents. However, it is the responsibility of the seller to pay for the documents. (Civ. Code §4530(b)(8).)

FEEDBACK

Humor #1. I really enjoy your newsletter and I am positive your sense of humor (slightly warped) is the result of years of dealing with homeowner associations. -Kat

Humor #2. You have such a funny sense of humor. I read your weekly newsletter just for your hilarious comments. -Cassie T.

Open Forum. THANK YOU for pointing out the option of allowing for member comments from the audience, at the discretion of the president (or policy of the board). This opportunity is sometimes overlooked in advice given on HOA meeting operations. It is an important way to improve member satisfaction with the value of their association. Here in Santa Barbara, local government allows for public comment both at the beginning of open meetings, and, if one signs up on the request form in advance, on any agenda item, after board discussion, but before any votes are taken. -Howard G.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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Suspicious Inspectors of Election

QUESTION: The Davis-Stirling Act states that ONE or THREE independent third parties must be chosen as inspectors of election. Since tabulations must take place in public, it appears suspicious when there are only two at the table when the law requires one or three. If the Inspector brings someone to open the ballots, does he count as an inspector because he is touching and unfolding ballots? If the assistant SORTS the ballots (touching the ballots) and asks questions to the Inspector about ballots, does he become an inspector?

ANSWER: There is nothing suspicious or inappropriate in what you describe. The Davis-Stirling Act addresses the number of inspectors (one or three) not the number of assistants (unlimited). (Civ. Code §5110(a).) What’s more, the Act actually requires that election rules:

Allow the inspector or inspectors to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are independent third parties. (Civ. Code §5105(a)(6).)

That means you can have one inspector and half a dozen assistants who register people, open envelopes and tabulate votes–all under the supervision of the inspector. Touching an envelope does not magically make someone an inspector. Under that reasoning, mail carriers become inspectors when they deliver envelopes to the inspector. I don’t think the Post Office has that in their job description.

RECOMMENDATION. The British government distributed posters to the people of England during World War II to help get them through the Nazi aerial bombardment. One of them read, “Keep Calm and Carry On.” That applies here. Don’t over-think the inspector issue or you’ll give yourself a stroke.

DOES DAVIS-STIRLING
APPLY?

QUESTION: Does the Davis-Stirling Act pertain to a nonprofit mutual benefit corporation? I am told it only pertains to public nonprofit corporations.

ANSWER: An association’s corporate status does not matter–if it meets the definition of a common interest development (CID), Davis-Stirling applies. By the way, most HOAs are nonprofit mutual benefit corporations not public benefit corporations. Some associations are not even incorporated and still fall under the Act. In addition, associations in existence prior to the Act are also bound by it.

PARTICIPATING IN
BOARD MEETINGS

QUESTION: Our board says members are not allowed to speak until the end of the meeting. Therefore, we are not allowed to express our opinions before an action is taken on an item on the agenda. Should we not be allowed to speak when that item comes up for discussion?

ANSWER: Members have a right to observe board meetings but they don’t have a right to participate in the board’s discussions and votes. This is the same policy followed at city council meetings–once the public forum is closed, citizens cannot interrupt council meetings to comment on issues. It’s even more restrictive on state and federal levels where there is no right to an open forum when the legislature/congress is in session.

Open Forum. The only time members have a right to participate in meetings is during the “open forum” portion of an open meeting (Civ. Code §4925, §5000(b)) and only for a reasonable time established by the board. Members can ask questions but directors are limited in how they can answer them.

Inviting Comments
. Although members do not have a legal right to participate in board discussions, the president can invite comments from the audience on particular items of business if he so chooses. This is at the discretion of the board. Once comments have been received, discussion can be closed and a vote taken by the directors.

FEEDBACK


Drought Self-Help. A board member discovered a watering device o
n a homeowner’s patio area. Water was dripping everywhere so the board member decided to climb over the wall and confiscate the watering device and refuses to give it back to the homeowner. What are the board’s rights? -Reader

RESPONSE: I understand your board member’s good intentions but directors should not be jumping fences and confiscating things from members’ patios, balconies, yards, etc. It makes them vulnerable to legal action for trespass and theft. There are better ways to address water wasters. Start with a phone call or letter and proceed to hearings and fines. If this fails, bring in the lawyers. If your hyperactive board member continues to act without authority, you should censure him.

Artificial Turf #1. A neighbor installed “Easy Turf” on his tennis court only to find it gets too hot to use between mid-morning and evening–something for HOAs to consider before installing it in the common areas. It would resolve the issue of not wanting children and pets playing on the grass. -Jean R.

Artificial Turf #2. With the drought situation, the HOA is considering the elimination of grass from common areas and parks within our association. Can the board do this without member consent? -Larry P.

RESPONSE: Boards have broad latitude to respond to emergency decrees and legislation. But they need to carefully weigh the pros and cons before installing it, especially if it covers large areas since surface temperatures can soar to 200º and sanitation can be a problem when dogs relieve themselves on it. Finally, there is a cost issue–the larger the cost, the more likely the membership will need to approve it.

Artificial Turf #3. Another problem with artificial turf is the removal of viable earth that is replaced with decomposed granite as a base, rendering the area unplantable, and presenting a cost issue that the HOA sometimes gets stuck with if the area needs to be restored or dug up for underground utility repairs. -Jeanne M.

RESPONSE: At least decomposed granite is better than the recycled ground up rubber tires being used by some. It may provide a “cushion” under the grass but it has toxicity issues. (See EPA website.)

Ceiling Speakers. Is the ceiling part of the fire rated floor-ceiling assembly? If so, just like with recessed lights cutting a hole in the ceiling is a no-no. The accepted practice is to build a 5-sided drywall box in the ceiling into which the light or speaker will fit. This effectively maintains the fire rating of the ceiling. Without a building permit and the inspection that goes with it or someone knowledgeable, this happens all the time and reduces the building’s ability to restrict the spread of fire. -Mike G.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

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