Jan 29

As most of you know, in addition to my weekly Sunday newsletters, I’ve taken on temporary duty assisting with a large state-wide event celebrating the 30th Anniversary of the Davis-Stirling Act.I encourage everyone to register for the historic February 27 Celebration which will feature keynote speaker Willie Brown, Senator Larry Stirling, Prof. Rosenberry and others (see side-panel for list of honorees). Tickets and sponsorships are still available but going fast. If you’re a manager, board member or homeowner in an HOA, you DON’T want to miss this event.


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


KATHARINE ROSENBERRY Law Professor Katharine Rosenberry’s signature contribution to community associations occurred in 1985 when she worked with Assembly members Gray Davis and Larry Stirling and a Task Force of industry leaders to craft legislation stabilizing California’s rapidly growing housing industry.Prof. Rosenberry identified 43 issues that needed to be addressed by the legislation. Overcoming great opposition, they drafted language, held hearings and then shepherded the bill through the Legislature. When it was signed into law by Governor Deukmejian, it became known as the Davis-Stirling Common Interest Development Act.

The Act established consumer protections with clear requirements for rules enforcement, maintenance, finances, reserve studies, dispute resolution and assessment collection.When the communist bloc fell, Professor Rosenberry was asked to lecture in the Czech Republic, Hungary and Poland on converting state owned apartments to private common interest developments. This was followed by a two-year project writing community association laws for England. And then, teaching positions at two law schools in China on cross-cultural approaches in common interest communities.

Join us in honoring Professor Rosenberry and others who made invaluable contributions to our industry at the 30th Anniversary Celebration and Awards Gala at the Fairmont Newport Beach HotelClick here to RSVP for the event.

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Jan 25

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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Jan 11

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.

CHRISTINE HULKA
JOINS ADAMS KESSLER

I am pleased to announce that Christine Hulka joined our firm. As our law practice grows, we are placing greater emphasis on response times, quality service and fixed fee products for our clients. Together with Nathalie Ross, Christine will oversee client services.

Christine is uniquely suited to assist managers and board members, having been president of her own association and then manager of common interest developments for one of the largest association management companies in the country.

As a former manager, Christine worked closely with board members, vendors and legal counsel on maintenance issues, contracts, budgets, reserves, payables, receivables, financial statements and litigation matters. As a result, Christine understands the need for quality information, fast response times and cost controls for clients.

Contact. You can contact Christine at (800) 464-2817 or christine@adamskessler.com.


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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Jan 05
30th ANNIVERSARY
CELEBRATION!

Governor George Deukmejian and the Board of Directors of the Foundation for California Community Association Education invite you to a celebration for the entire community association industry–the 30th Anniversary of the Davis-Stirling Act.

Dignitaries. Be a part of history. Meet and hear from those who thirty years ago had a vision for community self-government that continues to have an enormous impact on California. Their work brought stability and financial safeguards to a way of life for 14.5 million Californians.The following honorees will be recognized:

Governor George Deukmejian
Governor Gray Davis
Mayor Willie Brown
Senator Larry Stirling
Prof. Katharine Rosenberry
The Task Force
California Law Revision Commission

Willie Brown. The charismatic and enormously entertaining former Mayor of San Francisco and former Speaker of the California Assembly, Willie Brown, will be the Keynote Speaker commemorating this landmark legislation and the people who made it happen.

The reception and gala dinner with live entertainment will be held:

   • Friday, February 27

   • Fairmont Newport Beach
     4500 MacArthur Blvd
     Newport Beach, CA

Reservations. Tickets are selling quickly. To attend, please reserve your seat online. You can also spend the night at the Fairmont with room reservations at a discounted rate. If you want to help sponsor the event, please go to sponsorships. For more information contact Randall Avila at (949) 440-1027 or Events@QuimbyGroup.com or visit www.fccae.org.

Foundation. This one-time industry-wide event is overseen by a 501(c)(3) Foundation set up for that purpose. The Foundation is comprised of industry leaders whose commitment to education is reflected in their dedication to the community association industry. As part of that commitment, the Board will be donating proceeds to the educational programs of the California Association of Community Managers (CACM), the Community Associations Institute (CAI), and the Educational Community for Homeowners (ECHO).

KAREN CONLON
NAMED EXECUTIVE DIRECTOR

I am pleased to announce that FCCAE’s Board of Directors named Karen Conlon as Executive Director of the Foundation.

Karen has had an extraordinary career that makes her uniquely qualified to coordinate the 30th Anniversary Celebration.

Having spent the past 22 years as President and CEO of the California Association of Community Managers (CACM), an organization that trains and certifies managers, Karen recognizes the importance of common interest developments to California’s housing and the positive impact of the Davis-Stirling Act on the industry.

Karen also appreciates the need for quality education for board members and managers and the importance of the Foundation’s grants to CACM, CAI and ECHO.

Please join me in welcoming Karen Conlon to the Foundation. We look forward to what will be an exciting event filled with dignitaries, industry leaders and a fun retrospect of events that occurred 30 years ago.

Adrian Adams, President
Foundation for California
Community Association Education


The Foundation thanks our
EVENT SPONSORS

(click on logos to visit their websites)


 
 

To be a sponsor, go to Sponsor the Celebration. For more information contact Randall Avila at (949) 440-1027 or Events@QuimbyGroup.com.

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Dec 14

QUESTION: Can the board of directors overrule an architectural committee’s approval of a homeowner’s application?

ANSWER: Depending on how the committee is structured by your governing documents, an architectural committee either (i) makes recommendations to the board or (ii) has direct authority to approve or disapprove applications. In either case, the board has final say in architectural matters.

Board Options. In the first instance, the architectural control committee (ARC) makes recommendations to the board, which directors can accept or reject. The board makes the final decision. If the governing documents give the architectural committee independent decisionmaking authority, the board still retains control via four avenues.

1. Reconsideration. The first is when the ARC disapproves an application, the applicant can appeal to the board for a reversal of the committee’s decision. By statute, the board is given authority to reconsider and reverse ARC disapprovals.

2. Override ARC Decision. Where a committee’s decision is contrary to the CC&Rs (such as approving a structure in the setbacks), the courts have made it clear that CC&Rs control. Thus, boards can override an ARC approval so as to comply with the association’s governing documents. (See case law.)

3. Replace Committee Members. Nearly all documents provide that ARC members are appointed by the board. If the ARC refuses to reverse a decision, the board can remove committee members and replace them with members in line with the board’s wishes. (If committee members are elected by the membership, the board cannot remove them and will need court intervention.)

4. Seek Court Order. If the ARC cannot be removed by the board, it has the option of going into court for an order reversing the ARC’s decision. If, however, the disagreement between the board and the ARC is one of aesthetics rather than violation of the CC&Rs, the court will likely side with the ARC.

RECOMMENDATION: Make sure your association has clear architectural standards with application requirements, notice and review periods, rejection guidelines and, if appropriate, a reconsideration procedure. Where an architectural committee goes off the rails and makes decisions contrary to the governing documents, the board should immediately seek legal counsel.

THANK YOU!

I want thank everyone for their support and feedback this past year. You’ve been terrific. In addition to being loyal readers and critics, you visited our website 637,000 times with 3.1 million page-views.

In addition, you provided valuable suggestions for improving our website, which we are implementing.

Thanks to you, my firm continues to grow with the addition of five outstanding lawyers this past year. I deeply appreciate your confidence in our work.

May you and your families enjoy the holidays and have a New Year filled with peace, prosperity and happiness. From all of us at Adams Kessler, Merry Christmas and Happy New Year.

AK TEAM: Larry Stirling, Adrian Adams, Gary Kessler, Richard Witkin, Bill Dunlevy, Paul Ablon, Aide Ontiveros, Jasmine Fisher, Wayne Louvier, Cang Le, Karen Jacobs, Russ Higgins, Tina Chu, Eric Freedman, Nathalie Ross, Laura Whipple, Carolyn Houtz, Maureen Davidson and Laurie Paramore.

FEEDBACK

Caregivers #1. What about mobilehome senior communities? I thought they could restrict the age of caregivers. -A.L.

RESPONSE: You’re correct; mobilehome communities have a separate set of statutes governing them, two of which set the age restriction for caregivers at 18 or older. Civil Code §798.34(c) provides that owners can share their mobile home with any person over 18 years of age if that person is providing live-in health care or live-in supportive care to the homeowner pursuant to a written treatment plan prepared by the homeowner’s physician.

Civil Code §799.9(b) similarly states that an owner who resides in a senior mobilehome park may share his mobilehome with any person 18 years of age or older if this person is a parent, sibling, child, or grandchild of the senior homeowner and requires live-in health care, live-in supportive care, or supervision pursuant to a written treatment plan prepared by a physician and surgeon.

Caregivers #2. In your response to caregivers, I think HOAs should be wary of asking questions about health and responsibilities as it may violate privacy regulations. -Gary S.

RESPONSE: Agreed. HOAs can’t willy-nilly start asking health questions. Whenever the issue comes up, they should check with legal counsel about if and how to ask such questions.

Election Inspectors. We used the San Luis Obispo chapter of the California League of Women Voters as the Inspectors of Election. They handled all of the details, are independent and are free. That said, we made a contribution to their chapter. -Bob P.

RESPONSE: That’s definitely a step up from using the board president’s daughter.

*****

My Newsletter Picture. I don’t like the new picture of you in last week’s newsletter. It doesn’t look like you. -Mom

RESPONSE: I changed it back…mothers rule. Love, Adrian


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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Dec 07

QUESTION: Is there any law on caregivers and how young they can be? We have children who are going to school and grandparents let them stay as caregivers. We are a 55+ senior community.

ANSWER: I asked attorney Cang Le to answer this one. Following is his response:

Not Defined. There is no age-limit for a caregivers in senior communities. The defined term is a “permitted healthcare resident” (Civ. Code §51.3 & §51.11) and they can be a family member of the senior as long as the care they provide is substantial in nature and necessary for the senior’s daily activities or medical treatment or both. Since California considers a 16-year-old mature enough to work and drive a car, it is likely they would be deemed capable of providing care to a senior.

Qualified Resident. The other category of persons permitted to reside with a senior is a “qualified permanent resident,” who could be a disabled child or grandchild.

Policies & Procedures. If an association is concerned with whether a person is really a caregiver or other qualified permanent resident, it can enact rules and policies which require any person residing with the senior to verify the care being provided (or the child’s disability and other information to confirm if the person is a permitted qualified person under the law, including a physician’s certificate).

Cang Le, Esq.
Adams Kessler PLC     

Nuisance. If the person becomes a nuisance or poses a threat to the health and safety of other residents, the association could enforce its nuisance provisions. The law provides a procedure to prohibit the person from continuing to reside in the community.

RECOMMENDATION: Ultimately, the association must balance the expectations of seniors living in a 55+ community and the law’s allowance of other persons to reside with a senior. That balancing act can be better managed with well-defined policies and appropriate enforcement of those policies.

PRESIDENT’S DAUGHTER
HOLDING BALLOTS

QUESTION: Is it proper for the daughter of the board president to accept all election ballots even though she lives in the complex as a renter and has no legal standing or right to vote?

ANSWER: I can’t think of an instance where it would ever be proper. Her status as a renter is not relevant, it’s the “daughter of the president” thing that’s bothersome. As provided in the Davis-Stirling Act, inspectors of election must be:

An independent third party…[and] may not be a director or a candidate for director or be related to a director or to a candidate for director. (Civ. Code §5110(b).)

Using the president’s daughter would be improper, even if she did nothing wrong. Surely in a nation of 316 million people, the board can find a neutral third party to serve as the inspector of elections and hold ballots.

RECOMMENDATION: Hire a professional inspector of elections.

ERIC FREEDMAN, ESQ.
JOINS ADAMS KESSLER

I am pleased to announce that attorney Eric Freedman joined our firm.

Prior Experience. Prior to joining, Eric specialized in business and real estate law. He had a full-service practice providing litigation and transactional legal services to high net worth individuals and middle market corporations drafting and negotiating legal documents such as contracts, lease and purchase agreements, promissory notes, representation agreements and corporate formation documents.

He also managed general and complex litigation including securities, entertainment, contract, tort and intellectual property matters.

HOA Law. As former president and then treasurer of his own homeowners association, Eric brings first-hand experience when counseling boards of directors. Because he is intimately aware of the issues boards face, Eric has a practical approach to problem solving.

In addition to drafting and amending governing documents for HOAs throughout California, Eric works with large condominium projects, planned unit developments, mixed-use and high-rise developments in contract negotiations, land use and easement issues, and corporate governance matters.

Litigation. Eric’s strong background in state and federal court litigation in complex commercial matters, administrative proceedings, and alternative dispute resolution forums gives him the experience to steer boards through contract disputes, rules enforcement, easement issues, and FEHA and ADA obligations.

Education. Eric earned a Bachelor of Arts degree from the University of California, Berkeley where he majored in Legal Studies and Political Science and was on the Dean’s List for academic excellence. This was followed by a Juris Doctorate with Distinction from the University of Iowa College Of Law. Eric served on Law Review as a writer and articles editor.

If your association would like a proposal for legal services, please contact us by email or by phone at (800) 464-2817.

FEEDBACK


Director for Rent. About the realtor/board member who violates CC&Rs with short-term rentals, the City of Santa Monica actively enforces its 30-day rental requirement. A code compliance officer will go to the property, knock on the door and interview the resident. -Vanda H.

RESPONSE: Owners running weekend rentals have been on the rise. They would rent by the hour if they could. However, prostitution carries a heavier penalty so they opt for slightly longer rentals. Some owners use Realtors while others use Airbnb. Short-term rentals violate zoning laws in many areas pushing out long-term renters and negatively impacting neighborhoods. Many municipalities throughout the state frown on the practice and can be called-upon to help HOAs stop hotel-like operations.


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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Nov 30

QUESTION: In the event of a recall of the entire board is it necessary to vote at the same time for new directors or do we operate without a board for a brief period?

RESPONSE: An association should never operate without a board. By law, corporations are required to have a board of directors:

Each corporation shall have a board of directors. . . . the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board. (Corp. Code §300; §7210.)

Replacing Directors. Since an association cannot operate without a board, you have two choices: (i) the recalled board stays in place until a new board is elected or (ii) a new board is elected at the same meeting as the recall.

Option #1. I don’t recommend leaving a recalled board in place. If the membership is so unhappy that it votes to remove an entire board, they tend to get emotional if the recalled board continues running the association for another two or three months while nominations are solicited and a second election held.

Option #2. Electing a new board at the same meeting is the better course of action. Before distributing a recall ballot, the board should solicit nominees and include them on the ballot. At the meeting, the inspector of elections first establishes a quorum. If there is no quorum, the recall fails and everyone goes home. If there is a quorum, the inspector publicly counts the recall votes and announces the results. If there are insufficient votes to remove the board, the recall fails and everyone goes home. If the recall succeeds, the inspector tabulates the votes for candidates and announces a new board.
 
RECOMMENDATION: Associations should amend their election rules to include a section on recall procedures. If your association needs assistance, contact me.

NIGHTMARE
ON ELM STREET

QUESTION: Our president has mismanaged our small association. We’ve been suspended as a corporation; taxes have not been filed for ten years; the building has not been maintained; our reserves were lost; the president used her personal checking account to collect funds; she refuses to enforce the CC&Rs; and our common areas are being rented for storage but we receive no funds due to a side deal. What can be done?

ANSWER: A small claims action should get you access to financial records, assuming there are any to review. You can circulate a petition to recall the president or wait until the next annual meeting to elect new directors. If your membership is so apathetic that they refuse to take action, I see large special assessments in your future for deferred maintenance, underfunded reserves, back taxes, corporate reinstatement, and legal fees.

RECOMMENDATION: If you’re a voice crying in the wilderness, it may be time to sell your unit and run. As the 1800s French historian and author of Democracy in America Alexis de Tocqueville famously observed, “In a community association, members get the boards they deserve.”

BOARD MEMBER
FOR RENT

QUESTION: We have a CC&R prohibition against rentals of less than 30 consecutive days. More than a dozen owners violate the restriction by posting on short-term rental sites. One of our board members is a Realtor. He is telling owners to ignore the CC&R prohibition who then pay him to handle their rentals.

ANSWER: It sounds like your board member is for rent. The scenario you describe is a clear conflict of interest and breach of fiduciary duties. Your errant director should be censured by the board.

Fines. If his activities continue, the board should hold hearings, fine the director and suspend his privileges for promoting and facilitating violation of the CC&Rs. This can be done under the nuisance provision of the CC&Rs. Your board should also amend its rules to make it clear to the ethically challenged that they cannot facilitate others in violating the CC&Rs.

Lawsuit. I’m not a fan of litigation but the board could also go into court for an order that he cease violating the association’s CC&Rs. He would likely have to reach into his own pocket to defend himself. The association’s D&O insurance would probably not defend since the action is for breach of CC&Rs and injunctive relief and because the action is being brought by the board against the director–something often excluded by D&O policies.

RECOMMENDATION: The board should take action against the  misbehaving director. Otherwise, the board itself is open to legal action by the membership. In addition, the board should adopt an ethics policy. To put teeth into the policy, the board can amend the bylaws to make signing and following the ethics policy a condition for serving on the board.

FEEDBACK

Recall Quorum. I strongly disagree with your assertion that ballots count towards whether or not members may adjourn a meeting to a later date. There is no communication to a member who has chosen to vote by mail that their presence may be needed or required in the event not enough ballots or persons attend an original meeting. This is contradiction to a communication I received from this law firm four years ago in regards to this very subject. -Richard P.

RESPONSE: That’s a blow to my ego…a differing legal opinion, who would have thought?


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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Nov 16

QUESTION: The battle goes on in our community… the second recall election in six months! If they can’t make quorum, the petitioners believe they can adjourn the meeting to a new date with a lower quorum. I thought a recall died if it failed to meet quorum.

ANSWER: It depends on your bylaws. As you already know, special membership meetings are ridiculously easy to call. Only 5% of the membership need to sign a petition to trigger a recall meeting. That means quorum is the key issue.

Bylaws. Following is a typical bylaw provision:

In the absence of a quorum at a Members’ meeting, a majority of those present in person or by proxy may adjourn the meeting to another time… The quorum for such a meeting shall be at least twenty-five percent (25%) of the total voting power of the Association, present in person or by proxy.

No Exception. The provision makes no exception for recall meetings. Since recall meetings are membership meetings, a majority of those present can adjourn to a later date where the quorum drops to 25%. The unintended consequence is that a small number of members can recall an entire board. If only 25 of 100 members cast ballots, the recall meets the reduced quorum. Of the 25, only a majority, i.e., 13, are needed to approve the recall.

I find it troubling that in a 100-unit association, five members can trigger a special meeting and 13 members can recall an entire board. This scenario lends itself to a great deal of abuse as described in my October 26 newsletter. However, a careful reading of the bylaws with the Davis-Stirling Act provides some balance.

Majority of Those Present. The bylaws state that “a majority of those present…may adjourn the meeting” and the Davis-Stirling Act provides that:

each ballot…shall be treated as a member present at a meeting for purposes of establishing a quorum. (Civ. Code §5115(b).)

That means ballots count as members in the room. If 30 ballots were cast and only ten members physically attend the meeting and all ten vote for adjournment, ten is not a majority of forty. Therefore, the motion fails and the recall dies.

RECOMMENDATION: Rather than go through mental gymnastics, associations should amend their bylaws. I recommend eliminating cumulative voting, proxy voting, and quorum requirements for the election of directors (which eliminates the need for reduced quorums). All other meetings (including recalls) require a majority quorum.

Easy-Peasy. With those amendments, elections are easy. There are no reduced quorums and no cumulative voting calculations to create confusion. It’s a straightforward, two-step process. Did the petitioners make quorum? If not, the recall dies–there are no reduced quorum meetings. If they made quorum, did a majority approve the recall? It’s a straight up or down vote to remove a director or an entire board. No further calculations are needed.

If association’s have not already done so, they should update their documents with the above changes along with recall restrictions I described in prior newsletters. Doing so makes for low-cost, low-litigation elections. Contact me if you need assistance.

ABCs of HOAs

I will join a panel of experts in a program for board members that covers new laws affecting associations, insurance issues, collections and foreclosure, management responsibilities, budgeting and maintenance, plus questions from the audience.

This is a free event with a catered lunch and raffle prizes (including an iPad). The program will be held:

  • Saturday December 6, 2014
  • 11:00 a.m. to 3:00 p.m.
  • 7100 Hayvenhurst Avenue, Lake Balboa, CA 91406

Please RSVP to info@hoaorganizers.com or fax (818) 286-9434 or phone (818) 778-3331.

FEEDBACK

Director Loyalty #1. What if a board knows that rules are being violated and chooses not to enforce them? Would a director be expected to publicly support such a decision and keep silent about continuing violations? I think not. I don’t think a board member has a duty to support a decision that is contrary to CC&Rs or the law. -Bob W.

RESPONSE: Refusing to enforce rules is akin to the President refusing to enforce immigration laws–it makes a good campaign issue at election time. If your board actually approved a motion to stop enforcing pet restrictions (such as leash requirements), the board needs to make a rule change and put it before the membership for review and comment. If directors refuse, campaign like heck in the next election.

Director Loyalty #2. As long as a dissenting board member plays within legal, ethical and moral boundaries, they should be free to act as the respectful loyal opposition, to push their alternate agenda, and use whatever legal and appropriate tools at their disposal to challenge decisions and change outcomes. -Don H.

RESPONSE: I agree, provided they are respectful and play within legal, ethical and moral boundaries. Too often they don’t and that’s when I get pulled into the dispute.

Panty Thief. Earlier this year it was discovered that under-aged teens were having sex in one of the pool bathrooms. The board handled the situation in a timely manner and the activity, at least in the common area of our complex, ceased. Timeliness is the essence in such situations. -John A.

Ethics Policy. We need to remind boards that they should be looking to get a code of ethics in place before they need it. In addition, boards should not be emailing one another between meetings and should not put anything in writing that they do not want on the six o’clock news. Board members should remember that anything in an email can be inadvertently passed along. -Steve S.


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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Nov 09

QUESTION: Does the “duty of loyalty” mean I have to support, in public, a position reached by a majority of the board? Am I precluded from publicly dissenting and making adverse comments?

ANSWER: You can dissent and make adverse comments in a board meeting when the matter is under discussion by the board. But once a decision is made, it’s time to move on. You don’t have to become a cheerleader for the board’s decision but a director goes too far when he undermines the board or the agreed-upon course of action. Such behavior can result in a breach of the director’s fiduciary duties.

Business Judgment Rule. When a homeowner is elected to the board, he/she automatically becomes a fiduciary and must follow the business judgment rule. That means the actions of a director must be in good faith, in the best interests of the association, and with prudent care. (Corp. Code §7231(a).) Stating you voted against the motion but support the board’s decision is okay. Disrupting operations, attacking fellow directors and undermining an agreed-upon course of action is not okay. It is harmful to the association and falls outside the Business Judgment Rule. When that happens, disruptive directors face personal liability.

Dealing with Rogues. If a director goes rogue, the board may have no choice but to censure him/her and, where appropriate, form an executive committee to exclude the director from sensitive issues. Any director who believes he must win all votes is really not suited to be on the board. If needed, the board can call a membership meeting to remove the director.

RECOMMENDATION: Once the board makes a decision, dissenting directors should either publicly support the decision or keep silent. They should in no way undermine the board. If the director cannot follow this policy, he/she should immediately resign from the board. Once off the board, the former director can publicly oppose the board’s decision, provided he/she does not disclose any privileged information.

CHANGING RESERVE
SCHEDULES


QUESTION: Our past board had a reserve study done. However, much of the information is inaccurate. As a new board are we bound by the study? Many items are in need of repair or replacement but we feel we may get in trouble if we act outside the reserve study. What should we do?

ANSWER: Facts on the ground, not the reserve study, dictate your maintenance needs. The study is merely a guideline and boards have the authority to take appropriate action when it comes to repairs. Moreover, they have the right to notify the reserve specialist of the changed circumstances so adjustments can be made to the study. If the reserve company refuses to update the study with more accurate information, it’s time to change companies.

NOTE: For a more complete explanation of the balance between reserve practitioners and boards, see reasonable reserve alterations.

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UPGRADE


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FEEDBACK

Panty Thief #1. Years ago there was a teenager in our neighborhood who was a panty thief. That escalated to arson. Non-action by a board in situations such as this probably will result in larger and more serious crimes. -John R.

Panty Thief #2. The problem that disturbed me much more than stolen laundry is that the man is “tugging on a girl’s underwear.” I would not want my girls touched by anyone with this fetish, disabled or not. Let something more happen and the board could be in trouble. Love your newsletters. -Trudy H.

Panty Thief #3. I read your article about the laundry thief. Ha. That happened to me decades ago. The police told me the same thing–it escalates and escalates. In our case, it had been escalating from one pair to two to… They also told me not to go to the laundry room by myself day or night. Scary! Thank you for addressing the topic. -Patty M.

Panty Thief #4. Congratulations on the article you wrote regarding boards who ignore potential liability. The article was informative and well written. -Roy S.

*****

Abusive Recalls. Your emails are must-reads for me. I appreciate the discussion of trying to limit abusive recalls. But one point may have been left out. In the association I live, the requirements for recalls are in our bylaws. There is no limit on the frequency in the bylaws. With what little I know about the law, I’d doubt the board could enact rules that go against the bylaws. -Henry C.

RESPONSE: You’re right, election rules cannot contradict your bylaws (unless your bylaws conflict with the law). If your bylaws are silent on the number of recalls, your election rules can establish reasonable restrictions. If your bylaws specifically state that recalls cannot be limited, then you must follow your bylaws.


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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Nov 02

QUESTION: There is a man living in our complex who appears to have Down’s syndrome. He goes to the laundry facilities and steals women’s underwear and bras. He has even tugged on a girl’s underwear as she was bending over. The board is afraid of lawsuits and refuses to send the owner a letter. If anyone complains, they say “go to the police.” What can we do?

ANSWER: I passed this hot potato to attorney Jasmine Fisher. Following is her response:

Disability Rights. Your board may be unduly concerned about disability rights. Fortunately, the law only requires “reasonable” accommodation of disabilities. There is no law or case on record (yet!) that gives a disabled person the right to steal undergarments. That means your panty thief may create liability for your association if the board refuses to act.

Association Liability. While the association is normally not responsible for the criminal acts of a third party, Frances T. v. Village Green made an exception when the crime is foreseeable. In Frances T, the board knew about the increased crime in the area, failed to install exterior lighting Frances T. had requested (to make her unit safer) and actively prevented her from installing lighting. She was subsequently raped and robbed in her unit. The court found the association and its directors liable because the harm was foreseeable and they did nothing.

With your panty thief, it is foreseeable the thefts will continue and may escalate into something more physical. If so, your association could be liable for your board’s failure to act. Simply saying “Go to the police” will not remove the liability exposure.

Board’s Options. The courts provide a wide degree of latitude to board decisions so there is no right or wrong option, aside from doing nothing. The board can use the nuisance provision of your CC&Rs to call a hearing to warn the owner. If the behavior continues, fines can be levied (following another hearing). If that does not work, a letter from legal counsel threatening litigation can be next. Ultimately, a lawsuit may be necessary. If needed, the board can skip the early steps and jump to a lawyer letter and potential litigation.

Notice to Members. Should the members be warned? Notifying owners can be tricky. If you don’t notify the membership and your panty thief escalates to sexual assaults, your board could be sued for failing to warn the members. If the board says too much, they could be sued by the panty thief. It’s the same problem boards face when a registered sex offender moves into a complex. They can’t post a notice that sex offender Dilbert Smith moved into unit 301. They must be more circumspect.


Jasmine Fisher, Esq.
Adams Kessler PLC     

RECOMMENDATION: As JFK said, “There are risks and costs to action. But they are far less than the long range risks of comfortable inaction.” To minimize legal exposure, boards who are aware of criminal activity in the development should coordinate with legal counsel for appropriate (i) action against the perpetrator and (ii) notice to the membership.

ASSESSMENT
COLLECTION

QUESTION: As part of our assessment collection policy, should late fees, interest, collection and management fees be listed in the our fee schedule and policy?

ANSWER: You can but you don’t need to. I asked my collection guru, attorney Richard Witkin. He pointed out that according to Civil Code §5310(a)(6) and (a)(7) associations must distribute information on collection policies and procedures to the membership. Section (a)(6) specifically requires distribution of the “Notice Assessments and Foreclosure” set forth in Civil Code §5730.

This notice requirement is somewhat general in nature but does review many of the specific code sections controlling collection of delinquent assessments. Section (a)(7) requires distribution of “A statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments.”

However, this latter section does not specify how detailed a description must be. Collection policies can vary from one page to ten pages or more. A specific listing of the exact amount of fees and costs is not required. Too much detail can make it difficult to comply 100% with the policy. These two sections are not to be confused with Civil Code §5310(a)(8) and §5850 which require distribution of a specific schedule of monetary penalties (fines).

WE ARE HIRING
A CLIENT RELATIONS
PROFESSIONAL

We are looking for a full-time client relations professional to assist our law firm’s growing client base and territory. The person must possess high energy, self-motivation and an understanding of the HOA industry.

The position requires travel, so a flexible schedule and reliable transportation are a must. The person will work out of our corporate offices in West Los Angeles.

Please contact Nathalie Ross at nathalie@adamskessler.com or by fax: (310) 945-0281.


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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