Airbnb Rentals

QUESTION: Wondering if Davis-Stirling addresses Airbnb and how associations can deal with problems created by short-term rentals.

ANSWER: No it’s not addressed by the Act and yes you can do something about the problem.

Growing Problem. For those unfamiliar with Airbnb, it is a website for people to rent out their homes or even rooms on a short-term basis, whether it be a night, a weekend or a week. The service has become popular with tourists seeking lodging outside of hotels. Airbnb was founded in 2008 and in seven short years has grown to a $20 billion company with over 800,000 listings.

The problem with Airbnb short-term rentals was recently the subject of a front page article by the Los Angeles Times, “Homes as Inns Put New Pinch on Housing.” The reporter observed that landlords have discovered they can make more money renting their houses a few days at a time rather than months at a time. This has led to “a whole cottage industry” that cities are struggling to regulate because of the negative impact it’s had on the rental market. Long-term, stable renters have been pushed out by transient renters. Many municipalities now require short-term rentals obtain a license and pay a transient occupancy tax the same as hotels.

Impact on HOAs. Homeowner associations also suffer problems related to transient renters such as security issues, rules enforcement problems, higher maintenance costs, and increased administrative expenses because they require greater supervision. To meet the challenge, one association restricted short-term rentals and imposed a fee on landlords to offset the expenses they created.

Lawsuit. An unhappy landlord promptly sued the association over the restrictions and fees and lost. (Watts v. Oak Shores.) He appealed, and again lost. Thanks to his aggressive litigation, we now have favorable case law on the subject and he has a bill for $1.2 million in legal fees.

Published. We reported on the case three weeks ago. This past week, the court reclassified the case from unpublished to published, which means it can now be cited as case law. The court’s three major rulings are significant: (i) association’s have the right to restrict short-term rentals, (ii) boards can impose a reasonable fee to offset expenses associated with renters, and (iii) courts should defer to boards on decisions related to the maintenance, control and management of common areas.

Prohibiting Short-Term Rentals. If associations want to prohibit short-term rentals, they should be able to do so without the necessity of amending their CC&Rs. Most already have provisions in their CC&Rs that give them the authority they need. The first, found in many documents, prohibits owners from using their units for hotel-like operations. The second prohibits owners from running a business in the development. The third is the nuisance provision found in all governing documents. And, finally, most documents give boards broad powers to adopt rules and regulations for the benefit of the membership.

RECOMMENDATION: Associations wanting to restrict short-term rentals and/or impose fees on landlords should have legal counsel review their documents and make recommendations. To read the court’s decision, see Watts v. Oak Shores.

SOFTWARE MARKETING

WANTED

We are looking for someone to market our Smart HOA management software.

It’s a base plus commission that will grow as sales increase.

If you are interested, please contact us at maureen@smarthoa.com.

BOOTLEGGED

HARDWOOD FLOORS

A common problem encountered by condominium associations is bootlegged hardwood floors.

Violation. In Ryland Mews HOA v. Munoz, a new owner installed hardwood floors in violation of the CC&Rs and created intolerable noise conditions for the owner below. When confronted, Munoz refused to mitigate the problem claiming his wife suffered severe allergies.

Lawsuit. The association sued Munoz for the following CC&R violations: (i) creating a nuisance that unreasonably interfered with the quiet enjoyment of another owner’s condominium, (ii) altering his unit in a manner that increased sound transmission to an adjoining unit, and (iii) failing to get written approval from the architectural committee.

Court Order. The association asked the court to issue a preliminary injunction that Munoz relieve the problem pending trial on the merits. The court agreed and ordered Munoz to install rugs over 80% of his floors. Munoz appealed and lost, thus providing us with more case law on how to handle hardwood floors (and hard-headed owners). Munoz’ violation of the CC&Rs and his refusal to compromise saddled him with an order to install rugs and a looming trial that could result in fines, an award of attorneys’ fees, and an order to remove his hardwood floors.

COMMENT: Having an allergy does not give an owner the right to ruin his neighbor’s life. There are plenty of hypoallergenic rugs and other products on the market that could have simultaneously resolved the allergy and noise problems. It took a court to order Munoz to be a good neighbor. Even that was not sufficient, it took two courts. Some people are just not suited for condo living. To read the case, see Ryland Mews HOA v. Munoz.

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Director Abstentions

QUESTION: We have a 5-member board and a recent vote on a motion was two “for” and one “against” with two abstentions, does the measure pass since abstentions automatically count as “yes” votes?

ANSWER: Abstentions do not automatically count as yes votes. Abstentions are confusing when people conflate them with silent acquiescence. If a director verbally states, “I abstain,” it is not counted as a yes or a no vote, it’s a non-vote. In the scenario you describe, the motion fails. Since all five directors are present, you need three “yes” votes to pass a motion. Because only two voted for the motion, it fails. The outcome is different when you have silent acquiescence.

Silent Acquiescence. In a more common scenario, one director votes against, two vote in favor and the other two are silent. In that case, the two unresponsive directors are counted with the majority. The president properly announces the vote as four-to-one in favor and the motion passes.

NOTE: For a more complete discussion of the topic, see “Abstentions & Recusals.”

RE-VOTE FOR A NEW
AMENITY

QUESTION: The membership voted to add an amenity to the common areas but the board dropped the ball and wants to hold another vote to see if the result is the same. Are they allowed to hold another vote? How can we hold the board responsible to fulfill the initial directive of the members?

ANSWER: The board can hold a second vote but it would not be the same as the first one, i.e., “Do you want the amenity?” Instead, it would be a vote cancel the first vote. Since the membership already voted to install the amenity, it would require an affirmative vote NOT to install the amenity. You can hold the board’s feet to the fire through letters, open forum, and the election of new directors.

PAYING FOR
RESERVE REPAIRS

QUESTION: Can operating funds be used for reserve items? Any pitfalls?

ANSWER: There are no legal restrictions on using operating funds for reserve repairs. The considerations are more practical in nature, “Are sufficient funds available to cover the reserve repair without running the budget into a significant deficit?”

Two scenarios come to mind when you might want to use operating funds: (i) the component is not listed in the reserve study or (ii) there are insufficient funds in the reserve account.

MEMBER SURVEYS

QUESTION: We are reviewing our CC&Rs and would like input from members on board priorities, solutions, proposed changes, etc. This will give us an idea whether proposed changes would receive support before we go through the expense of sending a secret ballot. Can we survey members and do we need permission to publish responses?

ANSWER: Yes, you can survey your members and no you don’t need permission to publish responses, provided you keep them anonymous.

No Secret Ballot Needed. By statute, a secret ballot must be used for special assessments, election and removal of directors, amendments to the governing documents, and grant of exclusive use of common area property. (Civ. Code §5100(a).) Since a survey does not fall into any of these categories, it can be done electronically via an online service such as SurveyMonkey.com or SurveyGizmo.com. Even though secrecy is not required, members will be more forthcoming in their opinions if they are assured their responses are anonymous.

FEEDBACK

Director Emails #1. When it comes to board member emails, I do not agree with using names instead of positions. I would establish an email address for President@MyFriendlyHOA.org and then then set the account to forward a copy to JohnSmith@gmail.com. In the past I used GoDaddy to host these things, but Google Mail has some great corporate options that can host the domain’s email. -Jim S.

Director Emails #2. A simpler and less expensive way to handle HOA emails is used by members on my HOA board. We set up a dedicated email address that is used only for HOA emails. -Chris H.

*****

Marijuana #1. With today’s technology the THC content in oils and waxes exceeds that of the plant it is extracted from, thus, there are numerous ways to use the medication, or just get high, without the smoke. At least that’s what my cousin told me. -Scott C.

Marijuana #2. Just to add to your marijuana smoking in unit discussion, in 2009 California added marijuana smoke to the state’s Prop 65 carcinogen list. Thus, wherever cigarette smoking is banned, so is marijuana. In many municipalities, this extension was implemented, such as San Francisco where the Board of Supervisors applied the current ban of smoking in multi-unit complex common areas to include marijuana. The prohibition was also applied to all public areas where cigarettes are banned. -Joseph L.

Marijuana #3. What happens in cases where the smoker is using “medical” marijuana around the pool and on their balconies? We have a few “wake and bake” residents that are generating complaints by other residents.

RESPONSE: If you already have a ban against smoking at the pool, you can enforce it against cigarettes, cigars, pipes, e-cigarettes and marijuana alike. If smoking on balconies is creating a nuisance because smoke is drifting into adjacent units, you can adopt a rule against smoking on balconies.

*****

Humor #1. I have been reading your newsletter for years and always find them entertaining and informative. Thank you for the humor and the good advice. Almost 88-year-old condo owner and board member. -Doris Y.

Humor #2. Over the years I thought the photo that accompanies your signature was taken after you had prevailed over a particularly difficult case. But, over the last several newsletters I’ve concluded that grin is the grin of an amused (and perhaps bemused) deeply philosophical student of life and culture. -Longtime Reader


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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Hillary’s Emails

QUESTION: With all the news regarding Hillary’s emails, should our board set up a dedicated email account for official business?

ANSWER: Unlike federal employees, there is no requirement that boards use “official” email accounts. However, there are practical reasons for doing so.

1. Litigation. Even though homeowners do not have a right to inspect emails between directors, that changes when litigation is filed. As part of discovery, a director’s emails can be subpoenaed. When board members use personal accounts for HOA business, their personal emails can end up in plaintiff’s hands for the world to see if not carefully sifted from the record. That means sleepless nights deleting 30,000 “private and personal” emails, making it look like the board is hiding something. When people start deleting emails, plaintiffs and judges are understandably skeptical.

2. Confidential Information. Another benefit to an “official” HOA account is it becomes less likely that confidential HOA business will be viewed by family members. Many couples share email accounts and see each others’ communications. A family member is less inclined to log into a board member’s HOA account and read confidential communications.

3. More Cautious. Finally, using an HOA account should make directors more careful about what they write since emails are no longer personal but rather business emails that belong to the association. Knowing the emails are retained by the association should make directors more cautious and businesslike in their communications. That raises an issue that needs clarification–conducting business by email.

No HOA Business. By statute, boards cannot conduct association business by email. (Civ. Code §4155.) That does not mean directors are prohibited from emails altogether. Directors are allowed to (i) conduct emergency meetings, (ii) send emails to management and vendors, (iii) send emails to legal counsel, and (iv) send administrative emails to each other about meeting dates and times. For a more complete discussion, see “Email Meetings.”

RECOMMENDATION: Boards should reserve a domain name for their associations and establish an email account for directors. Setting up an account is easy and the cost modest. Email accounts should not be a generic “president@myfriendlyhoa.com” since they need to be terminated once a director is no longer on the board. Rather, use the director’s name, “j.smith@myfriendlyhoa.com.” Finally, boards should adopt an official “Email Policy” for directors that complies with the Davis-Stirling Act so board members know what they can and cannot do with emails.

FEEDBACK

More feedback on my March 1 newsletter.

Presidential Authority #1. One of the best newsletters. -Theresa S.

Presidential Authority #2. Surprised you were referring to Richard Nixon. I immediately assumed you were referring to President Obama, without a second thought! -Janice M.

RESPONSE: Perish the thought.

Presidential Authority #3. Your response about President Nixon actually made me laugh out loud. I am sure your agility is a great asset to the practice of law. Semper Fi to you and our country. -Pat S.

******

Marijuana Garden #1. What about excessive water usage? At many associations, dues pay for water used throughout the complex. It would seem to me that boards should be able to prohibit the practice of some activity (such as growing marijuana) that uses considerable water. -Larry M.

RESPONSE: A good argument for prohibiting marijuana gardens in master-metered properties.

Marijuana Garden #2
. In your last newsletter, you said a homeowner has no legal right to grow medical marijuana. What about smoking medical marijuana as prescribed by a doctor? We have a smoking ban and if I can’t smoke in my unit, where can I use my legal medicine? -John D.

RESPONSE: When it comes to “reasonable accommodation” so pot smokers can get their medicine, it has already been determined that employers are not required to accommodate an employee’s wish to use medical marijuana in the workplace. It’s unclear whether a nonsmoking association would be required to accommodate smoking in a unit. Even if accommodation is considered, smokers are not entitled to engage in an act that endangers the health and quiet enjoyment of their neighbors.

Secondhand smoke has been declared a human carcinogen and courts are increasingly protecting the rights of nonsmokers to be free from exposure to it. Earlier this week a judge in Washington D.C. issued a temporary restraining order against a pot smoker when neighbors sued alleging negligence, nuisance and trespass from secondhand smoke. Last year a California jury awarded damages against an HOA for not resolving a secondhand smoke dispute.

Pot smokers who disregard the health and well-being of others expose themselves to legal action for (i) breach of CC&Rs, (ii) intentional and negligent infliction of emotional distress, (iii) assault & battery, (iv) trespass, and (v) nuisance. I’m sure an enterprising young attorney could think of other causes of action to add to the list.

In summary, there are other ways for pot smokers to consume their medicine–weed brownies come to mind. I don’t know firsthand but I understand they can be quite potent.


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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Gala Report


Everyone,

The Foundation’s sold-out event was held this past Friday at The Fairmont Newport Beach. The room was filled with 350 guests decked out in tuxedos and glittering gowns. Guests were entertained by the Arroyo String Quartet during the reception and wowed by pianist Le Grand Barr during dinner.

Kudos. Following is a sampling of comments about the Gala:

What an amazing event. It was the night of a lifetime and I am so happy that you were able to squeeze me in. It was an honor to be there and to see such wonderful people celebrated! Bravo! Wonderful success! -Liz J.
Congratulations to you and all the volunteers on a most successful gala event. My neighbor works for Jaeschke and attended. She raved about the speakers and the history of the Davis-Stirling Act. We are all thankful that Prof. Rosenberry pursued the legislature to adopt laws for CIDs. I look forward to seeing photos of the gala. And, thanks for writing another great newsletter this week. -Chris S.

The gala was a huge success and a lot of fun. Thank you. -Karen J.

Awesome job!! Best event ever. -Mike P.

It was a great event. What a turnout. First class. You know how to put on a party. -Richard W.

THANK YOU SO MUCH FOR A WONDERFUL EVENING. You are the best! -Kirk W.

The gala was a wonderful event and I am so glad I was able to attend. -Laurie P.

What an excellent event. Everything was perfect. -Cal C.

Not only was it an event commemorating the 30th Anniversary of the Davis-Stirling Act – the major milestone in setting the life cycle of California Common Interest Developments; but it also put in clear perspective the human contributions that made it happen! The execution of the event itself, was flawless in all aspects: venue, food, entertainment and content! It was an informative and fun time. Well done! -Marc P.

Honoree Recognition. It was impressive to see so many dignitaries and industry leaders in one room. Beautiful “California Assembly Resolutions” and “Certificate of Recognitions” and “City of Newport Beach Proclamations” were presented to the Honorees recognizing their unique contribution to the State of California. Below are some of the honorees.

To view pictures from the event, go to the Foundation’s Facebook.

Anyone wanting high resolution pictures can go to Sipper Photography and put in access code: 56fec40b. If you have any questions, please contact Dana at dana@sipperphotography.com or at (714) 348-0630.

Many thanks to Karen Conlon and to the Foundation’s Board of Directors and The Quimby Group for all their dedication and hard work in making the 30th Anniversary such a success.

This is the Foundation’s final newsletter.

Sincerely,

Adrian J. Adams, Esq.
President
Foundation for California
Community Association Education
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Marijuana Garden

QUESTION: I live in a senior retirement community and grow medical marijuana. The board passed a rule banning marijuana in garden plots. Is the board’s action legal?

ANSWER: Yes, it’s legal.
Just because California does not prosecute citizens for growing a federally banned substance does not mean your association must allow it.

Nuisance. A marijuana garden can be a nuisance. First it has a strong odor that can be offensive to neighbors. Second, it’s a magnet for crime. People like to steal it. That is sufficient basis for an association to deem it a violation of the nuisance provision of the CC&Rs and ban it from garden plots.

Garden Plots. The January 1, 2015 change in the Davis-Stirling Act that allows backyard gardens (Civ. Code §4750.) does not allow for the growing of marijuana. The Civil Code defines “plant crop” to mean plants that bear edible fruits or vegetables. Although marijuana can be eaten, it’s not a fruit or vegetable. Moreover, the statute specifically excludes “marijuana or any unlawful crops or substances” from the definition of plant crops. (Civ. Code §1940.10(a)(3).)

RECOMMENDATION: There are other readily available sources of pot without creating problems for your neighbors. You should seek out those sources.

ABUSIVE ATTORNEY

QUESTION: We have a director who is also a lawyer. At executive sessions, he curses and threatens to sue other board members who don’t agree with him. He claims he can structure a lawsuit to make directors personally liable so we won’t be covered by our D&O insurance. Can he do that? Can we report him to the State Bar?

ANSWER: Most attorneys are professional in their behavior and an asset on HOA boards. The attorney you described is an embarrassment to the profession. Clearly, he does not have the temperament to serve on your board. A tranquilizer and an ethics course may be in order.

Insurance Defense. Even if he abuses his litigation rights by filing an unmeritorious lawsuit and draft it in such a way as to exclude D&O coverage, your insurance carrier would still defend although it might do so under a reservation of rights. As directors, you have the right to vote your conscience provided you follow the Business Judgment Rule, i.e., your decisions are made (i) in good faith, (ii) in a manner you believe to be in the best interests of your association, and (iii) with the care of an ordinarily prudent person.

Ethics Rule. You can report his behavior to the State Bar but his threats do not appear to violate rule 5-100 of the State Bar’s Rules of Professional Conduct, which prohibits an attorney from threatening criminal, administrative or disciplinary charges to obtain an advantage in a civil action. Even so, you can ask the State Bar if they think his behavior violates Rules of Professional Conduct.

RECOMMENDATION: You should hire an HOA attorney to advise the board on legal matters. Doing so may blunt the bad behavior of your director/attorney. In addition, you may want to amend your bylaws to require that any member in a legal proceeding against the association or fellow directors be disqualified from serving on the board during the pendency of the action.

MISUSE OF
PRESIDENTIAL AUTHORITY

QUESTION: Our HOA president identified himself as such at a recent city council meeting and spoke presenting the HOA in support of the council’s vote to ban smoking in multi-unit housing. There was no action from the board giving him that direction. Is it appropriate for a president to publicly represent the HOA on issues without approval by the board?

ANSWER: While most people support a smoking ban, it’s not appropriate for your HOA president to take that position with the city council without board approval. Sometimes presidents (including U.S. Presidents) act outside their legal authority. Some do so with good intentions some with bad.

RECOMMENDATION: A private discussion by your board with the president may be sufficient to fix the problem. If your president continues to act without authority, you can easily remove him and install a new president. Removing a U.S. President is a bit more difficult.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers–boards can contact us at (800) 464-2817 or info@adamskessler.com.

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Suspending Remote Entry

QUESTION: Can a board deny a delinquent non-disabled owner the ability to remotely open the lobby door from his phone thereby requiring the owner to go downstairs and open the door manually for guests?

ANSWER: Yes, the privilege can be suspended. Remote entry is a privilege not a right. The delinquent owner can still escort guests to his unit–he simply loses the convenience of remote entry (since he is no longer paying for it). Make sure you hold a hearing before suspending privileges.

INSURANCE
HAMMER CLAUSE

QUESTION: One of our members filed a bogus lawsuit against the board and our insurance appointed a law firm to defend us. After a year of being put through the ringer by a nutcase plaintiff and his slimy lawyer, our attorney is recommending settlement. We don’t want our insurance paying him a dime. We know we can beat this guy in court. Are we in our rights to refuse settlement and demand that the case go to trial?

ANSWER: You can refuse settlement but first you should find out if your insurance policy has a “hammer clause.” If it does, you need to carefully weigh the pros and cons of continued litigation. On the plus side, if you take the case to trial and win you discourage others from filing spurious lawsuits against the association. If you lose, it could cost the association a lot of money and a special assessment.

Economics of Settling.
Insurance companies don’t look at who’s right or wrong–they look at the economics, i.e., the cost of taking a case to trial verses the cost of settling. Not only are trials costly, there is a risk of losing. A loss could burden the insurance company with damage awards and plaintiff’s attorneys’ fees. to avoid the risk, they like to settle.

Hammer Clause. To ensure that boards cooperate with settlement offers, insurance carriers frequently insert a “hammer clause” in their policies. In the event a board refuses to settle and takes a case to trial and loses, the association, not the insurance company, pays the difference between the rejected settlement offer and (i) any additional legal fees incurred by the carrier, plus (ii) any judgment against the association, plus (iii) any award of legal fees against the association.

Plaintiff Refuses to Settle. Sometimes it’s the nutcase plaintiff who refuses to settle. When that happens, insurance continues to pay for defending the association through trial and sometimes beyond (if the nutcase loses and files an appeal).

Thank you to Tim Cline of Timothy Cline Insurance for his assistance with this question.

FEEDBACK

Mudslide Loss #1. I don’t think mudslides are covered under homeowner policies. -Don L.

RESPONSE: You’re right. Mudslides are not a covered peril but coverage is available for purchase as a “Difference in Conditions (DIC)” policy. It is something homeowners who are downslope from a burn area would purchase. “Loss of Use” coverage provides additional living expense while repairs are made to the house. This coverage is also an extra.

Mudslide Loss #2. What if common areas were damaged and the association needed to special assess the membership? Does that go to the membership for approval? -Geri N.

RESPONSE: If the association’s insurance does not cover a loss, the board could levy a special assessment under its emergency assessment powers. Members who carry loss assessment insurance could then file a claim against their own policies to pay the assessment.

Mudslide Loss #3. If the association is providing no services to the lots because they are “red tagged” it would seem that they should be exempted from assessments equal to the costs they are not incurring. -Doug C.

RESPONSE: The association would still have ongoing operations, maintenance, utility bills, street repairs, reserve contributions, management contract, etc. If this is a 40-unit association, one-fourth of their budget will be wiped-out if ten homeowners stopped paying assessments. That means a special assessment against the other thirty homeowners. To avoid potential legal challenges, the board should put it to a vote of the membership.

Reserve Components. In your article about unplanned reserve components, you made no mentioned that an association’s CC&Rs may control how reserve monies are treated. Ours (from the 1970s) state that “Reserves for a specific item shall only be expended for that particular item.” -Bob A.

RESPONSE: You’re right, your governing documents must be taken into consideration when dealing with reserve issues. CC&Rs might include restrictions that would necessitate a special assessment instead of the more flexible approach I described. You may want to amend your documents.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

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Mudslide Assessments

QUESTION: About 10 homes in our community were red-tagged by the city due to severe damage from mud and rock sliding off a mountain slope. I asked our board to waive monthly assessments for those homes until they could be occupied again. I was told “We do not have the authority to do that.” Are they correct?

ANSWER: Waiving assessments is analogous to California waiving property taxes. If you can get the state to waive taxes you might have an argument for the board waiving assessments.

Deficit. Forgoing assessments is a friendly gesture but it would create a deficit in the budget that would have to be covered by other members via a special assessment.

Negligence. Fortunately, there is no need to drop assessments since the ten homeowners should have insurance to cover their loss. If they failed to carry insurance, you would be asking your neighbors to involuntarily pay for someone else’s negligence, i.e., their failure to insure.

RECOMMENDATION: If you want to waive assessments, I recommend putting it to a vote of the membership. If the membership approves the waiver, the board would not be acting outside their authority.

UNPLANNED
RESERVE COMPONENT

QUESTION: Should an improvement not listed on the reserve study be paid out of the operating account? We had to modify the drains on a deck above the garage.

ANSWER: Whether you pay from operations, use reserve funds, or special assess depends on the cost.

Small Cost. Some components are left out intentionally because, relative to the association’s annual budget, the cost to replace is too small to include in the study. In that case, you pay out of operations.

Moderate Cost. Sometimes components are left out by mistake. If the cost is moderate and the reserve account healthy, reserve funds can be shifted between components and the missing item added to the study.

Significant Cost. If, however, the impact on the reserve account is significant because the cost to repair is high or the reserves are underfunded, the board may need to borrow from reserves and levy a special assessment to repay the account.

RECOMMENDATION: If you use reserve funds previously allocated to other components, make sure you notify your reserve specialist so he can make appropriate adjustments to the study.

Thank you to Les Weinberg of Reserve Studies Incorporated for his assistance with this question.

BOARD MEMBER WORKSHOP
AND WINE TASTING

Since it includes wine tasting, I thought I better pass this along. On Friday, February 20, the Coachella Valley Chapter of CAI is hosting a Board Member Workshop from 3:00 to 5:30 p.m. at the Shadow Mountain Resort and Club in Palm Desert.

The workshop includes a briefing on legal and insurance issues with Laurie Poole and Tim Cline. It costs $15 and the Chapter is offering tickets to its wine tasting event (5:30 to 8:00 p.m.) for only $5.00 for attendees of the workshop. Please RSVP at 760-341-0559 or admin@cai-cv.org.

FEEDBACK

New Yorker. If you ever decide to change careers, Adrian, may I suggest writing satire for The New Yorker? Even if the topics don’t always apply to me, I know I’ll get a laugh–sometimes from the questions themselves; sometimes from your answers. Please keep it up. -Lee H.

Priceless. Your sense of humor is priceless! I look forward to reading your newsletter every week. Thanks, Roy S.

Politically Correct. You totally crack me up! In this day and age where political correctness is often taken to the point of absurdity, you can still pull off some great “tongue in cheek” humor. Good for you! -Judy M.

Humor. I love everything about your newsletter, graphics, tone, tenor, substance, generosity and sense of self-deprecating humor. -L.S.

Humor #2. Love the humor you inject into your answers! We need laughter as the best medicine, so thank you!! -S.W.

Never? NEVER NEVER use my address again for ANYTHING. -Z.C.


COMMENT: I don’t think he likes the humor.

Really Funny. Love your humor–really, really, smart and funny. There has been no announcement in at least 30 days about a new lawyer addition to your firm. Things must be slowing down! -Cassie T.

COMMENT: If you know any good HOA lawyers who may be looking, send them my way.

Voice of Reason. As always, your newsletter is superb. In an area of law practice which deals with conflicts oddly similar to family law disputes, you are a voice of reason. -Joseph M.

RESPONSE: HOA law makes family law look easy. When parties get divorced they go their separate ways. In HOAs, battling parties never leave…they run for the board and elevate their dispute to a new level.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

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Unqualified Director

QUESTION: Four months ago we elected a new board. We now learn that one of the directors is not on title as required by our bylaws. Does that make the election invalid? Do we need to start over with a new election?

ANSWER: Voiding the election means it never occurred. Doing so may create unpleasant consequences.

Consequences If you undo the election, prior board members retake their seats since you cannot legally operate without a board. They may or may not be willing to assume their responsibilities. It also means all decisions by the “unelected” board are nullified such as (i) contracts entered into, (ii) liens recorded against delinquent owners, (iii) foreclosure actions, and (iv) disciplinary actions against members. This would create legal mischief.

Proper Course. The proper course is to vacate the seat of the unqualified director. The board can then appoint a replacement.

CHOOSING
OFFICERS

QUESTION: We recently held our annual election. Afterward board members decided who would fill which position (president, secretary, etc.). One director declined his appointment because he wanted another position. Can a board member be made to serve in a position he won’t accept?

ANSWER: Nyet. Laa. (“No” in Russian and Arabic. The way things are going, both are languages we may need to learn.)

DEALING
WITH WATER LEAKS

Attorney Russell Higgins will join John Temoyan of Har-Bro Emergency Services and Craig Phillips of the International Tower in a seminar highlighting the dangers of water leaks. They will cover:

-First steps
-Board involvement
-Best practices
-Whose responsibility?
-What if it goes legal?

The seminar will be held Tuesday, February 10, 2015 from 6:00-7:30 p.m. at the Renaissance Long Beach Hotel. Please sign up at www.cai-glac.org or call 818-500-8636.

FEEDBACK


This is about the woman who demanded local phone numbers and 24/7 access to board members:

24/7 Access. What if the board refuses to use a management company? Are board members required to provide 24/7 access under those circumstances? -Cynthia S.

RESPONSE: Even management companies don’t always provide 24/7 telephone support. Managers sometimes have a private life and actually go home at night. I know it’s shocking but it happens. Associations that don’t provide 24/7 support often distribute a list of emergency phone numbers (for plumbers, locksmiths and the like). Older members then use a magnet to stick it to their refrigerator door. Younger members enter the information into their cell phones. Even though I’m older, I’m technologically savvy–I put emergency information in my cell phone and stick it to the refrigerator door.

This concerns the election where no one showed up except the inspector of elections:

Annual Meeting. How does the president call a meeting to order when there are no other board members? -Tena H.

RESPONSE: Since an annual meeting is a meeting of the members, a quorum of directors is not needed. In last week’s newsletter, the Inspector had enough ballots to establish quorum without anyone physically attending the meeting. If no one shows up, the Inspector can either open ballots and tally votes or give notice that ballots will be opened at a board meeting. I recommend the latter.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

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24/7 Access to Directors

QUESTION: One of our residents is insisting that a board member who does not have a phone number with a local area code violates her rights to 24/7 access to the Board. Does he have to get a local area code?

ANSWER: Her “right” to 24/7 access to board members?? I diligently searched the U.S. Constitution, the California Constitution and the Davis-Stirling Act and found no such right. Maybe I missed something but I don’t think directors become indentured servants upon their election to the board.

Area Code. As for her complaint about calling an outside area code, I’m amazed she even has a director’s phone number. Under no circumstances are directors obligated to provide their phone numbers to residents, let along get a local area code.

Management. Residents should be calling the management company with maintenance requests and to lodge complaints. If they want to personally complain to board members, they can do so during the open forum session of board meetings.

LIMITING LAUNDRY

QUESTION: Some homeowners claim they have enough votes to restrict usage of the laundry to residents only. They feel some residents have guests who use the laundry excessively. Can they vote to restrict our laundry?

ANSWER: Your unhappy homeowners may have the votes but they don’t have the authority to adopt rules.

The only “rules” authority reserved to members is veto power. They can reverse a board-adopted rule but members cannot create or enforce rules. Adopting rules is a power of the board. (Civ. Code §4340; §4350

RECOMMENDATION: If there is a problem with an owner’s guest, a friendly talk with the owner may resolve the problem.

ELECTION NO-SHOWS

QUESTION: At our annual meeting, the inspector of elections arrived but no owners or board members were present. If she has enough ballots to establish quorum, can she open the ballots and tally the votes?

ANSWER: The shortest annual meeting I ever attended consisted of the president, the inspector of elections and myself. Nobody else attended. The inspector had sufficient ballots to establish quorum and the president called the meeting to order. The inspector opened the ballots and counted votes. Five minutes later she announced the results. The president adjourned the meeting and we all went home.

In your case, you don’t even have a director or attorney present. I suppose the inspector could proceed with opening and counting ballots:

All votes shall be counted and tabulated by the inspector or inspectors of elections, or the designee of the inspector of elections, in public at a properly noticed open meeting of the board or members. (Civ. Code §5120(a).)

However, to avoid inevitable complaints about opening ballots without a witness, the inspector should pull someone into the meeting. If she can’t find anyone, she should hold the ballots unopened until the next board meeting and have management give notice to the membership that ballots will be opened and counted then.

DELINQUENT OWNER
PRE-LIEN

QUESTION: We have an owner who is chronically delinquent. After we gave him a pre-lien notice, he paid. Based on his history we know he will again become delinquent. Can we continue the pre-lien process?

ANSWER: I passed this to our assessment collection expert, Richard Witkin. Following is his response:

If the account is current, you cannot continue under your last pre-lien letter. You must wait until he again becomes delinquent. If he paid his assessments but failed to pay prior collection costs and fees, you should accrue them on his account and include them the next time he defaults.

Attorneys’ Fees. As long as attorney’s fees incurred by the association are “reasonable,” they should be recoverable. (Civ. Code §5650(b)(1).) However, it would be best if the attorney’s fees were incurred at a time and date when the owner was delinquent. Fees associated with planning actions for future possible delinquencies are probably not recoverable.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

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Personal Opinions

QUESTION: Is a board member allowed to vote on an issue according to his own personal opinions? Example: board member personally does not like a certain type of tree so he votes against planting them in the common areas.

ANSWER: Personal opinions…everyone has one. The law does not require directors abandon their opinions when elected to the board. If they did, whose would they adopt?

Rather, directors are required to make decisions (i) in good faith, (ii) in a manner they believe to be in the best interests of the association, and (iii) with such care as an ordinarily prudent person would use in similar circumstances. (Business Judgment Rule.)

If a director’s opinions are out of step with the community, homeowners can express their own views during Open Form and fellow directors can out-vote him. That’s why you have boards of five directors with majority votes–it exerts a moderating influence on outliers.

SUMMARY
OF NEW LAWS

The sausage factory in Sacramento gave us a number of new laws last year that went into effect January 1. Following are some of the more notable ones:

Internal Dispute Resolution. The ugliest of the new laws is an amendment that makes a mess of Internal Dispute Resolution (IDR). For years, IDR has been an effective no-cost way of resolving disputes in community associations. An owner could meet with a board member to discuss a grievance. The change in the law gives owners the right to bring a lawyer with them to an IDR meeting. (Civ. Code §5910(b); §5915(b)(4).) They can do so without prior notice, i.e., ambush the board. Moreover, there is no mediation privilege. That means anything said in IDR can be used against either party. Accordingly, a board member should not continue with IDR if an owner shows up with a lawyer. The meeting should be rescheduled so the association’s attorney can attend. See Recommendations.

Personal Agriculture. Despite any restrictions in an association’s governing documents, homeowners can plant personal-use food gardens in their exclusive use backyards. The bill does not authorize crops for commercial purposes or to be sold on the property. Nor does it authorize the growing of marijuana or other non-food crops. (Civ. Code §4750.)

Fines During Droughts. Homeowners already have the right to install water-efficient landscaping. The Davis-Stirling Act was amended to prohibit HOAs from imposing fines against members who reduce or eliminate watering vegetation during any period which the Governor or local government has declared a drought emergency. (Civ. Code §4735.) Another change makes unenforceable any requirement that owners pressure wash the exterior of their units. (Civ. Code §4736.)

Maintenance & Repairs. Maintenance obligations related to exclusive use common areas were clarified. Unless otherwise provided in an association’s CC&Rs, homeowners must maintain exclusive use common areas but the association is responsible for repairing and replacing them. (Civ. Code §4775.) This change takes effect 2017.

Solar Energy. HOAs can adopt reasonable rules that do not significantly increase the cost of a homeowner’s solar energy system or significantly decrease its efficiency. “Significantly” used to mean decreasing efficiency by 20% or increasing the cost by 20% (not to exceed $2,000). “Significantly” now means 10% and $1,000. (Civ. Code §714.)

COMPLETE LIST. For a complete list of new statutes and case law, see 2014 Changes in the Law.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight, and experience.” We are friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

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