Apr 20

QUESTION: Does the board have the right to ask residents to declare if they own a gun and what kind? Don’t we have 2nd Amendment rights?

ANSWER:
The Second Amendment to the U.S. Constitution guarantees the right of citizens to possess firearms. However, the right is subject to reasonable regulation. (Dist. of Columbia v. Heller (2008) 554 U.S. 570, 626-27; governments allowed to impose narrowly prescribed and reasonable restrictions on guns.) For example, you cannot carry a firearm on a commercial airliner. If airport screeners find one, you won’t be boarding the plane. Reasonable regulation of firearms also applies to HOA common areas.

Common Areas. In Nahrstedt v. Lakeside Village, the California Supreme Court stated that “use restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangement.” And, associations “may limit activities conducted in the common areas as well as in the confines of the home itself.” Accordingly, associations could restrict residents from carrying or brandishing firearms in the common areas. The restriction would be deemed reasonable since California Penal Code §25850 already prohibits carrying a loaded firearm in public.

Handgun Ban. Although HOAs can regulate handguns in the common areas, any attempt by a board to ban handgun ownership would be struck down. The U.S. Supreme Court overturned a Chicago ban on handguns in McDonald v. City of Chicago (2010) 130 S. Ct. 3020.

Registration. Can a board require residents to register their guns with the association? Probably not. There is no safety or security benefit to registration since HOAs cannot license or ban gun ownership.


Wayne Louvier, Esq.
Adams Kessler PLC    

Moreover, California Penal Code, §25605(b) provides that no permit or license to purchase, own, possess, keep, or carry, either openly or concealed, shall be required of any citizen of the United States or legal resident over the age of 18 years. While this statute applies only to government registration of firearms, it shows a public policy against registration. In Nahrstedt, the Supreme Court used public policy as one of the criteria for judging the reasonableness of a restriction.

CONCLUSION: A court would likely deem registration of firearms to be inconsistent with public policy and invalidate the HOA requirement.

NEW ROOF FOR
DAUGHTER

QUESTION: My daughter recently purchased the condominium next door to me. The issue of a new roof for that unit in on the agenda for our next meeting. I have no financial interest in my daughter’s unit. Do I need to recuse myself from voting on the roof for her unit? I am president of the board.

ANSWER: Even though you may be fulfilling your duties to the association by approving needed roof repairs, you do not want to give the appearance of impropriety. If you don’t recuse yourself from the vote, people will assume you are inappropriately using association monies to benefit your daughter. Whenever faced with an apparent conflict of interest, the safest course of action is to step out of the meeting and let the remaining directors vote on the issue. It insulates you from accusations from those who like to stir the pot.

FEEDBACK

Spouse on the Board. Does the spouse always come with the pronoun “she?” -Judith K.

RESPONSE: That’s the case from a man’s point of view. You know how they have a one track mind.

Longest-Serving Director. Our board president frequently introduces me as “the longest-serving board member in California.” Is he correct? I was elected in 1980 and have served continuously since then in every capacity. We have had an incredibly cohesive board since the very beginning, with hardly any private agendas. It has been a privilege and a lot of fun to serve! My current position (besides Secretary) is Historian! -Linda G.

RESPONSE: Kudos for your service to the community! Your cohesive, well-functioning board will be envy of many. You may indeed be the longest continually serving director in California. We’ll see if my readers know of anyone who has served longer.


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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Apr 13

QUESTION: What is the statute of limitations for collecting delinquent assessments?

ANSWER: Statutes of limitations (SOL) are laws that restrict the time period within which legal proceedings may be brought. For example, if a driver runs a red light, the state can’t wait twenty years to prosecute the infraction. For traffic violations, the state has one year to take legal action, otherwise time runs out and legal action is no longer allowed.

Protect the Accused. This legal concept is designed to protect defendants from unfair prosecution. If the government drags its feet prosecuting a crime, evidence to defend the accused may be lost with the passage of time, i.e., memories fade, witnesses die and documents are lost. Protecting the accused also applies to private grievances, which are referred to as civil actions. (When the state takes action, it’s called a criminal proceeding; when a private individual seeks redress for damage, it’s called a civil action.)

Collecting Debt. There are different statutes of limitations when it comes to collecting debt. If money is borrowed and a promise made orally to repay the debt, the statute of limitations is two years. (Code Civ. Proc. §339.) If parties enter into a written agreement, the SOL is four years (Code Civ. Proc. §337). When the obligation is the result of recorded restrictions, e.g., an obligation created by CC&Rs, the SOL is five years. (Code Civ. Proc. §336(b), Pacific Hills HOA vs. Prun.) Accordingly, an association has five years to initiate action to collect delinquent assessments. However, if a court views the obligation as a written contract, the SOL is four years.

RECOMMENDATION: There seems to be some uncertainty as to whether the SOL for delinquent assessments is four years or five. Regardless, boards should not be waiting years to collect a debt owed to the association. Uncollected debt is harder to collect the older it gets. Plus, it burdens the membership who must make up the difference in the budget and it skews an association’s financial statement. If it’s bad debt, associations should write it off. If it’s collectable, boards need to pick a collection method and pursue the debt in accordance with the association’s collection policy.

Thank you to Wayne Louvier and Richard Witkin for their input on this question. NOTE: Adams Kessler offers all forms of debt collection. Contact us for more information.

SPOUSE ELIGIBLE TO
SERVE ON BOARD?

QUESTION: If a single person buys a unit and then later marries but does not have the deed to the property changed to include the spouse, is the spouse eligible to serve on the board of directors?

ANSWER: Whether the spouse can serve on the board depends on director qualifications contained in your bylaws. If your bylaws require that all directors be members of the association, then the spouse is not eligible to serve on the board because she is not an owner.

Percent Ownership. Although not true in all cases, a great deal of mischief can be done by those who get around membership requirements by transferring a 1% interest or even half of 1% to a spouse so that person can serve on board. They often have a personal agenda and can be disruptive and unreasonable until they get what they want. Hence, our firm (i) includes a minimum ownership requirement of 10% when we amend bylaws to add director qualifications and (ii) disallows co-owners from serving on the board at the same time.

FEEDBACK

Free Speech #1. I love reading your newsletter please don’t stop. -Denise E.

Free Speech #2. You failed to mention that the First Amendment is a check on governmental censorship and not private action. The reason the HOA cannot regulate possession or viewing of porn in private is the right to privacy under the California Constitution, not the First Amendment. I agree that when the viewing of porn spills over into the common area or interferes with another’s right to quiet enjoyment, the HOA can regulate it. -Bill R.

Free Speech #3. “Do members have the right to watch porn in the privacy of their units? Of course.” However, this in-home porn watching does not extend to child porn. Under federal law, 18 USC 2252 and 2252A, the mere possession of child pornography–book, magazine, periodical, film, videotape, computer disk, or any other material that contains an image of child pornography–could land the possessor in prison for up to 10 years (first offense) and 40 years (if prior sex-related conviction). -Barry P.

*****

Drunk Board Member #1. Adrian…”elect them to Congress”…very funny, cannot stop laughing! Well said my friend. -Paul P.

Drunk Board Member #2. Now we know where those people in Congress come from! That explains a lot! -Trudy M.

Drunk Board Member #3. Excellent reply to your last statement! Keep up the good humor! -Doris Y.

Drunk Board Member #4. Love your response about sending the crazy ones to Congress but there is one problem–they sometimes come back and become Mayor of San Diego! -Gerie V.

*****

Thank You. Just wanted to thank you for your newsletter emails updating us homeowners’ association members across the state who have apathetic boards of directors. Our board is dominated by non-resident owners who say “no” to everything. Your work is important to keep us informed about our rights, solutions, and legal standing. -Charles H.


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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Apr 06

QUESTION: Our HOA held an election but never received the results. I heard about it through the grapevine. I emailed the board and never received a reply. I was of the understanding that election results are supposed to be published.

ANSWER: By statute, the results of an election must be reported to the membership and recorded in the minutes of the next meeting of the board. Failure to do so is a violation of the Davis-Stirling Act and the court may, but is not required to, void the election for the failure to report election results. (Civ. Code §5145(a).) The violation also makes the association vulnerable to monetary penalties of up to $500 per violation. (Civ. Code §5145(b).) If someone challenges your election for failure to report the results, the court is more likely to fine the association than void the election.

ONE VOTE PER ISSUE

QUESTION: Our HOA is having board elections. There are three vacancies. Our manager tells us that each unit can cast only one vote, not one for each vacancy. I’ve never heard of such a thing.

ANSWER: There may have been a miscommunication by the manager. Members are allowed one vote per open seat. If there are three open seats, members have three votes. If there are five candidates, members can vote for three of the five candidates. The Inspector tallies the votes for all five candidates and the three with the highest number of votes win.

Cumulative Voting. If you have cumulative voting, members can cast all three votes for one candidate. Because cumulative voting has a way of complicating elections–I recommend amending bylaws to get rid of it.

CALIFORNIA LEGISLATIVE
ACTION COMMITTEE

This weekend I am attending “Legislative Day at the Capitol” along with two other attorneys from my office, Gary Kessler and Jasmine Fisher.

Balancing Controls & Rights. The event is put on by the Community Associations Institute’s California Legislative Action Committee (CAI-CLAC). This nonprofit committee monitors legislation and advocates a reasonable balance between state control and the ability of homeowners to govern themselves through their community associations. CLAC supports good bills and opposes bad ones.

Costly Bills. For example, one of the bills introduced this year would drive up legal expenses for associations and their members. Currently, members have a low-cost way to resolve disputes through Internal Dispute Resolution (IDR). Like small claims court, this informal “meet and confer” process excludes lawyers. AB 1738 undermines this popular consumer protection by introducing lawyers into the mix.

Protecting Consumers. To protect members and associations from the expense and elevated risk of litigation created by this bill, CLAC will advocate for preserving the right to low cost dispute resolution. I will keep you updated on this and other bills as they make their way through the Legislature.

ORANGE COUNTY OFFICE
OPENED

I am pleased to announce the opening of our Orange County office effective April 1, 2014. Attorney Wayne Louvier is heading-up the office and will oversee legal services for our clients in Orange County and San Diego. The address is:

Adams Kessler PLC
18101 Von Karman Ave., Suite 330
Irvine, CA 92612

Contact us at: (800) 464-2817 or info@adamskessler.com.

FEEDBACK

Drunk Director #1. Adrian–gotta raise a toast to your rider about allowing directors to tipple after contentious encounters with members during meetings. That makes serving on the board somewhat worthwhile. Thanx for the lighthearted approach. -Robert M.

Drunk Director #2. Good advice on how to deal with a drunk board member, especially the last paragraph. But, how should a board deal with a member who obviously is missing a few nails?? -Wayne W.

RESPONSE: There is no easy answer. The crazy ones drive up an association’s legal expenses, frustrate directors and torment managers. I suppose if all else fails, you could elect them to Congress.


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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Mar 23

QUESTION: What do you do about a board member who shows up drunk at meetings?

ANSWER: To avoid personal liability for their actions/decisions, directors must perform their fiduciary duties “with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.” (Business Judgment Rule.) That standard is hard to meet when a board member is DUI (Director Under the Influence).

Reckless Indifference. As with drunk drivers, a drunk director is not competent to get behind the wheel. Their impaired judgment is self-induced and could be deemed reckless indifference or deliberate disregard of their obligations to the membership and an abdication of their duties as a director. Such behavior is specifically excluded from protection by Corporations Code §204(a)(10)(iv)&(v), i.e., it exposes the director to personal liability.

Fellow Directors. What impact does it have on fellow directors? The worst case scenario is the drunk director gets into a fight with and seriously injures a homeowner at a board meeting. The injured owner then sues the board for not previously taking action against the inebriated director. While the likelihood of success against all directors would depend upon foreseeability of the impaired director’s actions, the lawsuit would certainly succeed against the problem director. The plaintiff would also prevail against the association since the director’s actions occurred while in his official capacity.

Censure. If the board does nothing, it has the effect of condoning the director’s bad behavior–something that would certainly be used against the board at the time of trial. To protect themselves and the association, fellow directors should warn the impaired director to go home and sleep it off and never again appear at a meeting intoxicated. If the bad behavior continues, the board should censure the director.

Removal from Office. If the director is an officer (president, secretary, treasurer), he can be removed from office by fellow directors. Unseating him from the board however, is not an option unless the bylaws specifically authorize it. That is something normally reserved for the membership via a recall.

Ethics Policy
. If boards have not already done so, they should adopt a “Code of Conduct” or “Ethics Policy” to address these kinds of situations. I posted a sample policy on the website. It gives fellow directors something to reference when talking to a wayward director (or censuring him/her).

NOTE: If you adopt an ethics policy, be sure to include an exception that allows directors to get drunk after meetings where they have to deal with particularly difficult homeowners.

CANG N. LE, ESQ.
JOINS ADAMS KESSLER PLC

I am pleased to announce that Cang Le has joined Adams Kessler PLC. Having been raised in the Inland Empire, Cang will head-up our Riverside office.

Experience. Cang has broad experience representing common interest developments as both general and litigation counsel. In corporate counsel matters, Cang advises boards in the preparation, interpretation and enforcement of contracts, amending and restating governing documents, insurance coverage issues, rules enforcement, ADA compliance and all other matters affecting associations. In litigation and ADR matters, Cang has obtained hundreds of favorable outcomes for his clients and works with boards to avoid litigation wherever possible.

Education. Cang received two undergraduate degrees from the University of California, Davis–a Bachelor of Arts (BA) in Political Science and a Bachelor of Science (BS) in Managerial Economics. He then earned a Juris Doctorate (JD) from the University of San Diego School of Law where he was awarded a merit grant to continue his legal studies which led to a Master of Laws in Taxation (LLM).

Cang Le is a talented lawyer and solid addition to our team. If your association would like a proposal for legal services, contact us by email or by phone at (800) 464-2817.

FEEDBACK


Lease Addendum #1.
Is it mandatory that the owner/tenant agree to sign the lease addendum? Can it be signed after a tenant has moved into the unit or should it be done before? -Sharon B.

RESPONSE: If your CC&Rs require a signed lease addendum, then yes it’s mandatory. Ideally, you want the addendum signed before the tenant moves into the development. If your CC&Rs have appropriate language, you can require both owner and tenant sign the addendum. How you enforce the requirement will depend on how your development is configured.

Closed Developments. If your development has manned guard gates or a building with a staffed front desk (controlled entry points), the association can prevent a tenant from moving in until the agreement has been signed.

Open Developments. If the development cannot control who moves in, the association has more difficulty enforcing the provision. If not done prior to move-in, the board can levy fines and suspend privileges until the agreement is signed.

Lease Addendum #2. I do not agree with the clause: “(vii) tenant agrees to pay the owner’s assessments should he become delinquent.” It puts the delinquency problem of the landlord onto the innocent tenant. The tenant would be expected pay his/her rent plus the delinquent assessments. -John M.

RESPONSE: The tenant deducts the assessment payments to the association from his rent payments to the landlord.

Lease Addendum #3. I have never seen or heard of this in any California document or newsletter before, but Lordy, it sure would be nice if this were the case. There are many associations just barely able to hold their heads above the water because of delinquent homeowners who rent their units out. -Don C.

RESPONSE: The lease addendum has, thus far, proven effective in the associations where I’ve implemented it. In addition, I’ve successfully tested it in superior court.

Lease Addendum #4
: I don’t mind providing the tenant information sheet to the association but feel that requiring a completed lease is an invasion of privacy! -Laura H.

RESPONSE: The beauty of the lease addendum is that it does not require you to provide your lease to the association. All of your private and proprietary information remains private and proprietary. The  addendum is a separate agreement signed by the owner, tenant and association obligating the tenant to follow the association’s rules and to divert his rent payments to the association in the event the owner becomes delinquent.


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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Mar 16

QUESTION: Our board is frustrated with delinquent homeowners who collect rent on their units but refuse to pay their dues. Is there anything we can do?

ANSWER: There is a very effective provision I added to CC&Rs 20 years ago to address this issue. It’s called a supplemental lease agreement or lease addendum.

Lease Terms. Whenever an owner leases his unit, both the owner and the tenant are required to sign a lease addendum supplied by the association that requires, among other things, (i) the lease be for the entire unit; (ii) no assignments or subleases are allowed; (iii) the lease is for not less than one year; (iv) tenant agrees to comply with the association’s governing documents and be subject to the its disciplinary procedures; (vi) owner assigns rents from his unit to the association in the event he becomes delinquent; and (vii) tenant agrees to pay the owner’s assessments should he become delinquent.

Effective Tool. The agreement provides a tool that associations need to hold both the homeowner and the tenant accountable since they are parties with the association to the agreement. When I go into court with CC&Rs and a signed agreement, neither the owner nor the tenant have a defense. Normally, a demand letter from my office with the relevant documents enclosed and a threat of litigation is sufficient to get prompt payment of the delinquent assessments. Only once have I had to go into court to enforce the lease addendum.

Rules Enforcement. The addendum is also effective in bringing a wayward tenant into compliance with the rules. Per the signed agreement, the owner and the renter are subject to disciplinary action. Both can be fined and, if necessary, sued. Moreover, the agreement gives the association the power to evict the tenant for violation of the terms of the lease addendum.

RECOMMENDATION: If your association has problems with delinquent landlords and/or problems with rules enforcement involving tenants, a lease addendum may solve both problems. If you have questions about implementing this in your association, contact me.

RICHARD G. WITKIN, ESQ.
JOINS ADAMS KESSLER

I previously announced our new association with Witkin & Neal, Inc. for nonjudicial foreclosures.

I am very pleased to announce that attorney Richard G. Witkin has formally joined Adams Kessler PLC as Of Counsel. Because of his expertise, Richard will be coordinating all assessment collection matters for the firm.

Assessment Collection. Richard Witkin is well-respected in the industry for his extensive knowledge of assessment lien and foreclosure matters. Richard is a member of the United Trustee’s Association and has attained the highest level of expert certification by the UTA and serves as an expert on collection issues in state and federal courts.

Experience. Prior to launching Witkin & Neal, Inc., a premier delinquent assessment lien and foreclosure collection company, Richard gained a wealth of experience as Vice-President and General Counsel of Fidelity Trustee Service, an independent foreclosure trustee. At Fidelity, he supervised thousands of non-judicial foreclosures and conducted hundreds of foreclosure sales. Richard’s expertise includes foreclosure issues involving mixed collateral, multiple collateral and deficiency judgments.

Education. Richard Witkin graduated magna cum laude from Colorado State University and earned his Juris Doctorate from UCLA’s School of Law. He later became a faculty member of the law school from 1980 through 1987.

Articles. Richard has lectured and written extensively on foreclosure issues with articles that include:

• Avoiding Impediments to Real Estate Foreclosures.
• Choosing Between Judicial and Non-Judicial Foreclosure.
• Enforcing Security Interests in Real and Personal Property in Calif.
• Everything You Wanted to Know About Foreclosures.
• Homeowners Association Options at Time of Foreclosure Sale.
• Homeowners Association Options After a Senior Wipe-Out.
• Homeowners Delinquent Assessment Liens and Short Sales.
• Negotiating the Foreclosure Maze.
• Recent Developments in Real Property Foreclosures.

Mr. Witkin is a heavy-hitter and we are pleased to have him in our firm. Contact us for a free analysis of your association’s collection needs.

LIARS, LAWYERS
& LUNACY!

I will be the keynote speaker at Beven & Brock’s 2014 Board Member Seminar. The topic “Liars, Lawyers & Lunacy” will cover rules enforcement and include: 

• Adopting enforceable rules,
• Fine policies that get results,
Keeping boards out of hot water,
How to stop lawyers, and
• Dealing with liars and lunatics.

RSVP. The event will be held Thursday, March 27 from 6:30 to 8:30 p.m. in Pasadena and is open to board members and homeowners alike. Please RSVP to (626) 795-3282 or HOASeminars@bevenandbrock.com for location directions.

FEEDBACK

E-Cigarettes. I’ve read the newsletter for what–eight or nine years? It helped me considerably during the seven years on my own board. It made me sound smart. I read it now for the entertainment value. I can snicker because I’m NOT on the board, but I do go to meetings and serve as inspector of elections, or whatever it’s called, so I am an interested party. I’m no longer a smoker, but by golly, this e-cigarette stuff has got me riled. The direction of this talk goes way beyond my comfort zone when it comes to invading my personal rights zone. Thanks for reading. I’m a fan. -Linda H.


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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Mar 09

QUESTION: My HOA wants to adopt a complete smoking ban–no smoking in the common areas and no smoking inside units. Can we also ban e-cigarettes?

ANSWER: Good question. Electronic cigarettes are battery-powered devices that deliver nicotine in a vapor to the user. According to advocates, they have fewer toxins than regular cigarettes and none of the tar, making them less harmful to users than traditional cigarettes. Moreover, there is no second-hand smoke, no carcinogens in the vapor and no odors; therefore, no problem. Not everyone agrees.

Airlines. The Department of Transportation adopted a policy that passengers cannot smoke e-cigarettes on commercial aircraft. When proposing the ban, the DOT stated:

In light of the unknown health risks with the use of electronic cigarettes by individuals who ‘smoke’ them or the people around them and the growing availability and use of electronic cigarettes, the Department is proposing this amendment … to explicitly ban the use of electronic cigarettes aboard aircraft.

Governments. Two weeks ago, the European Parliament issued strong regulations requiring health warnings on e-cigarettes. Tuesday, the second largest city in the country, Los Angeles, voted to prohibit them in all workplaces as well as parks, city beaches and outdoor dining areas. Contra Costa County, Richmond and Carlsbad have already banned them and other cities around the state are taking steps to either regulate or ban them.

Universities & Businesses. The University of California banned e-cigarettes on all its campuses. It did so because many of the elements in their vapor “are known to cause respiratory distress and disease.” According to the U.S. Food and Drug Administration samples of the nicotine liquid they tested had “detectable levels of known carcinogens and toxic chemicals. The National Business Group on Health issued a “Fact Sheet” on why businesses should consider banning them in the work place.

HOA Common Areas. It is clear from the growing number of regulatory agencies, municipalities and business organizations that associations have sufficient basis to ban e-cigarette use in the common areas. Boards can do so with a simple rule change. The rationale for banning them inside condos, however, is less clear.

Inside Condos. Because condominiums (and most stock cooperatives) have shared walls, ceilings and floors where cigarette smoke can drift into adjoining units, the annoying odors and carcinogens give associations a solid basis for banning smoking inside units, and many already have done so. Banning e-cigarettes, however, may be more difficult to justify since they are not a fire hazard and their vapors might not create detectible odors in adjoining units or cause harm to neighbors.

RECOMMENDATION: If associations decide to completely ban all smoking, including e-cigarettes, they should do so via an amendment to the CC&Rs. If the ban is a recorded restriction, it is presumed reasonable and the burden is on the challenger to prove it is not.

NATIONAL PUBLIC RADIO

I was interviewed this week by Rachael Myrow, host of KQED-FM’s “California Report,” which broadcasts to NPR stations all over the state. The interview dealt with the challenges HOAs face with older residents.

We discussed how members on fixed incomes resist dues increases and special assessments needed for repairing and refurbishing the common areas. The interview also covered health issues, slip and falls, and memory loss problems and how this impacts associations.

Rachael, who has been on an HOA board herself, sympathizes with all sides and is doing an in-depth piece on the challenges “aging in place” creates for older members and their associations. To that end, She would like to interview board members, managers and older residents to get their perspective on this important issue.


If you would like to assist Rachael, please contact Nathalie Ross by e-mail or 800-464-2817.

COACHELLA VALLEY
BUSINESS & EDUCATION EXPO

The Coachella Valley CAI will be holding its 2014 Business and Education Expo on Tuesday, March 25.

The event is free to board members, managers and homeowners and will feature guest speaker Tom Kirk who will talk about the CV Link and how it will impact homeowner associations in Coachella Valley.

The CV Link is a proposed 52-mile trail that will run from Palm Springs to Coachella with a continuous pathway for pedestrians, bicyclists and low-speed electric vehicles.


In addition to valuable information for HOAs, there will be food, wine and drawings for attendees. The program will be held at the Marriott Desert Springs Resort in Palm Desert. RSVP with Tammy at admin@cai-cv.org or (760) 341-0559. Stop by and visit me at our booth! -Adrian

FEEDBACK

No Candidates #1. Having served on an HOA board for five years now, Adrian’s “Recommendation” for obtaining new board members gave me a good belly laugh. -Ken W.

No Candidates #2. Your “apathy” example mirrors two of the HOA boards I am on. Despite having over 100 owners in two complexes, we sometimes have only one owner that shows up for the meetings and virtually no one wants to serve on the boards. What drug do you recommend? -Chuck M.

RESPONSE: I know a manager who makes some wicked moonshine.

No Candidates #3. Interesting as always-especially assessments are paid in full first and then any fees owing. Not sure about drugging potential candidates and dragging them to the annual meeting????? -Jeanne T.

RESPONSE: It’s a tough business we’re in.


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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Feb 23

QUESTION: Some people own three units and they sometimes combine all their ballots in one envelope and provide all three addresses on the outer envelope. Does this count as one toward quorum or can I count it as three toward quorum?

ANSWER: All three ballots count toward quorum.

If your records show that a particular member owns three units, he is entitled to three ballots. If he puts all three in one envelope, he is simply being efficient with his use of paper and postage. He doesn’t realize it creates an administrative hiccup on your end.

The tricky part comes when you open the envelopes. When you open his outer envelope, you must write “three ballots” on the inner envelope or immediately open the inner envelope to make sure there are only three ballots inside. If he has more than three, all of them are void.

On the other hand, if there is only one ballot in the inner envelope, you need to see if he cast all his votes on the one ballot. Then, as the Inspector of Elections, you must make a decision. Do you count the votes or void the ballot because it has multiple votes on a single ballot?  By statute, Inspectors have the authority to make a judgment call. Inspectors can:

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

I favor counting votes whenever it is clear what the voter intended. But that is a decision for the Inspector to make, not the attorney.

FAIR HOUSING ACT
vs ARCHITECTURAL STANDARDS

In a recent fair housing case, a federal court found that an association’s enforcement of its architectural standards involving handicapped children was reasonable.

The Hollises have five children, two of whom are disabled. They submitted a request to their association’s Architectural Control Committee (ARC) to add a nonconforming sunroom to their house. The metal frame design they submitted did not meet architectural standards and was rejected by the ARC.

The Hollises responded that the sunroom was for their disabled children and asked for reasonable accommodation under the Federal Fair Housing Act. Even though the ARC compromised some of their standards, the Hollises were not satisfied and sued the association for discrimination.

The court ruled that the ARC’s actions were not discriminatory as the record was replete with evidence demonstrating the ARC’s sole focus was on the aesthetic design of the addition, the materials to be used, and the design’s potential impact on the value and architectural standards of neighboring homes.

COMMENTS: The ruling shows that being disabled does not give a member a blank check to do whatever they want. (See Hollis v. Chestnut Bend HOA.) Discrimination claims can be defeated when an association carefully documents the non-discriminatory process they followed to reach a reasonable decision. Whenever a request for reasonable accommodation is made, boards should work closely with legal counsel to address the request.

FEEDBACK

Voting Combined Units. We have a member who owns two units. Although she pays dues on both, she only gets a single vote because our CC&Rs were amended so that owners of multiple units are limited to one vote. This was done to prevent a single owner from controlling election results. Is this legal? -David M.

RESPONSE: Last week’s article did not address the scenario where an association amends its CC&Rs to restrict voting rights. Because there is nothing in the law directly addressing this point, I polled more than a dozen HOA law firms around the state to get their opinion on whether associations can eliminate voting rights by amending their documents. With one exception, the consensus was that documents cannot be amended to remove voting rights. The following analysis supports that opinion:

Multiple Memberships. The Corporations Code provides that no person may hold more than one membership. However, a specific exception is made for associations so owners of more than one lot or unit can hold multiple memberships. (Corp. Code §7312.) With membership attaches voting rights.

Voting Rights. “Except as provided in a corporation’s articles or bylaws or Section 7615 [cumulative voting], each member shall be entitled to one vote on each matter submitted to a vote of the members.” (Corp. Code §7610.) While the language is permissive, it appears to be aimed at allowing cumulative voting rather than eliminating voting rights. This is supported by another Code provision.

No Removal of Voting Rights. Section 7813 of the Corporations Code  states that documents cannot be amended to adversely affect the voting rights of a class without their permission nor can a new class cannot be created without their permission. Removing the voting rights of members who own multiple units would create a new class of members. Doing so would require their permission.

FINAL NOTE
: If an association could vote to remove someone’s voting rights, they could also vote to allocate all expenses to that person. From an equity (fairness) perspective, I doubt the courts would uphold amendments removing voting rights.

Many thanks to attorney Jay Hansen of Epsten Grinell & Howell for his analysis on this issue and to the law firms from around the state who responded to this issue.


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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Feb 16

QUESTION: I own two condos in my building (two separate titles; two separate mortgages, etc.). With board approval, I combined the two units. The president claims I only have one vote now that the units are combined. Is that true?

ANSWER: No, it’s not true. For living purposes you occupy a single unit but for all other purposes they remain two units.

As you pointed out, you have two titles and two mortgages. In addition, (i) your association’s condominium plan continues to show two units, (ii) your CC&Rs include both in the total units for the development, and (iii) your board continues to levy regular and special assessments on both.

That means you have two votes–one for each unit. If your board wants to eliminate one of your votes, it must first go through the costly process of amending your CC&Rs and Condo Plan (via attorneys, civil engineers, member approval, mortgagee approval, County approval and court approval) to eliminate one unit from the records.

OBSERVATION: I’ve overseen the combining of units in many associations. To date, I’ve never had a board ask if it could voluntarily spend a LOT of money and YEARS of effort just to eliminate one vote. Theoretically it may be possible, as a practical matter it’s not. Let me know if yours is the first.

AGING IN PLACE


Rochelle LeBlanc, Producer/Host of the television show “Let’s Talk,” recently interviewed me for her program.

Our topic was the growing challenge associations face with aging residents.

We discussed the potential liability to associations posed by health and safety issues, memory loss problems and injuries to seniors. To watch the interview, click on Let’s Talk with Rochelle LeBlanc.

MOTIONS AT
MEMBERSHIP MEETINGS


QUESTION: I am under the impression that homeowners can make motions at their annual meeting; am I correct?

ANSWER:
Pre-2006, you could make motions but that effectively ended with changes to the Davis-Stirling Act.

Robert’s Rules
. Under Civil Code §5000(a) membership meetings must be conducted using parliamentary procedures. The most common procedure is Robert’s Rules of Order, which allows members to make motions from the floor. In the “old days” a member could make a motion at the annual meeting. Once it was seconded and debated, it could be put to a vote. I chaired many a meeting where motions were made and votes taken by a voice vote (ayes and nays) or a show of hands.

Davis-Stirling Act. Everything changed in 2006 with Civil Code §1363.03 (now §§5000-5145) which established procedures for elections. Under Civil Code §5100(a), significant votes such as approval of special assessments, election and removal of directors, governing document amendments and the grant of exclusive use common areas requires an Inspector of Elections (Civ. Code §5110) and secret balloting for not less than 30 days (Civ. Code §5115). This procedure effectively precludes all but incidental matters from floor votes. Even incidental matters are problematic.

Color Change. With the advent of mail-in ballots, few members attend meetings any more. In a 100-unit association, sixty members might send in ballots, thereby establishing quorum for the meeting, but only nine members might actually attend. If one person makes a motion to change the color of all buildings from earth tones to navy blue and five vote for the change and four against, does the motion pass? I don’t believe it does.

No Prior Notice. How can the other sixty members whose ballots established quorum vote on the color change since they were not present to hear the motion? I don’t believe the matter can be raised at the meeting without prior notice to the membership. Moreover, I don’t believe approval is a majority of nine (those physically present) but rather a majority of those present in person and by ballot, i.e., a majority of sixty-nine members (60 by ballot and 9 in person).

Assuming that approval can be accomplished by those physically present at the meeting, allowing five members to change the color scheme of the entire development would create an uproar. Members would be properly outraged since there was no prior notice of the vote.

RECOMMENDATION: Any matters of significance should be put to a vote of the entire membership via written notice and ballot rather than from the floor of an annual meeting.

FEEDBACK

FHA Certification. I had an association FHA certified a few years ago. When it was time to recertify, however, they were turned down. To ensure there weren’t too many rentals (FHA limit is 50%), the association’s CC&Rs had been amended requiring new owners to live in a unit for a year before renting it, thus limiting investor purchases. In the intervening years, though, the FHA decided to deny certification if there are any rental restrictions. In other words, no certification if a CID restricts rentals and no certification it it has too many rentals. Catch 22–damned if you do, damned if you don’t. Our tax dollars at work… -Trudy M.


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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Feb 09

Ken Harney writes an award-winning, nationally syndicated column for the Washington Post on “The Nation’s Housing.” On January 27, he interviewed me for an article he was writing about the vulnerability of associations to discrimination claims related to FHA certification.

His interest was triggered in part by an article I wrote last November about an Ohio Civil Rights Commission investigation of alleged familial discrimination when a condo board declined a single mother’s request to certify the development for FHA financing (so she could buy a unit).

After a six-month investigation, Ohio’s CRC found insufficient evidence the association had violated the law. However, they left open the door that the buyer could file an action in federal court for disparate impact discrimination. If that were to happen, the Department of Justice could pursue the matter against the association.

Ken Harney noted that the current administration has already aggressively pursued disparate impact discrimination against mortgage companies. In other words, condominium associations could be open to civil rights claims for not seeking FHA certification because their decision has the practical effect of discriminating against minorities. To read the article, see “Condo Boards Could Face Discrimination Claims.”

RECOMMENDATION: As I noted in last year’s article, any decision not to seek FHA certification must be based on non-discriminatory reasons, which should then be recorded in the board’s meeting minutes. Boards should seek legal assistance drafting the board resolution before it is recorded in the minutes.

DUES INCREASE
WITHOUT MEMBER INPUT

QUESTION: Can the board increase monthly dues without discussing it with the homeowners first?

ANSWER: Yes they can. The duty to manage the association falls to the board of directors. They are the ones most knowledgeable about the association’s financial condition since they pay the bills and review the association’s financial reports.

Directors don’t like raising dues because (i) they have to pay them just like everyone else and (ii) they get abused by members when they do. Even so, by statute (Civil Code §5600) boards are required to levy assessments sufficient to perform their duties. The legal duty falls on them not the membership. That explains why boards don’t seek permission from the membership and why they increase dues when they would rather not.

Assessment Restrictions Void. Even if your CC&Rs were amended to require membership approval for any and all assessment increases, that restriction is voided by the Davis-Stirling Act. Regardless of anything to the contrary in an association’s governing documents, boards may increase regular assessments up to 20% and levy special assessments up to 5% without membership approval. Anything more requires owner approval, which is defined as approval by a majority of votes at a meeting with more than 50% of the owners in attendance. (Civ. Code 5605(b).)

RECOMMENDATION: If you as a member want a say in all assessment increases, you need to run for the board.

WITKIN & NEAL
COLLECTION SERVICES

I am pleased to announce that Witkin & Neal, Inc. now handles all liens and nonjudicial foreclosures for Adams Kessler PLC. The company’s affiliation with Adams Kessler means we can offer a broader range of assessment collection services to our clients.

Audrey Neal. Witkin & Neal, Inc. is an independent foreclosure trustee company headed by Audrey Neal. Ms. Neal has more than thirty years of experience in all areas of real property secured collections. She acquired valuable knowledge in foreclosure matters through various financial institutions, including serving as an Asset Manager with the Federal Savings and Loan Insurance Corporation (FSLIC) and the Resolution Trust Corporation (RTC).

Richard Witkin. Richard Witkin, the other half of Witkin & Neal, is well-respected in the industry for his extensive knowledge of assessment lien and foreclosure matters. Richard is a member of the United Trustee’s Association and has attained the highest level of expert certification by the UTA and serves as an expert in collection issues in state and federal courts.

Joined Forces. In 2006, Richard Witkin and Audrey Neal founded Witkin & Neal, Inc.–a company dedicated to providing assessment collection services to community associations. Since its founding, W&N has developed a solid reputation for fast, efficient and successful resolution of delinquent accounts. Their services include:

  • Complete collection services from pre-lien to sale;
  • Online status reports accessible by boards of directors;
  • Free legal hotline for management companies and board members;
  • Free library of collection-related legal articles; and
  • Free legal advice on small claims court and judgment collections.

The high level of expertise brought by Richard Witkin and the invaluable experience of Audrey Neal together with the corporate counsel of Adams Kessler PLC means our clients can be assured of unparalleled collection services.

If you have questions or wish to take advantage of our expanded collection services, please feel free to contact us.

FEEDBACK

Dues Increase #1. I couldn’t contain my laughter at your response to “Scandalous Dues Increase.” It sure sounds like it’s way past  time for a rewrite of their governing documents–not that the members will want to pay for that either. Thank you for an appropriate response. I think a good sense of humor should be mandatory to be involved with anything CID because you’re really going to need it! -Cynthia C.

Dues Increase #2Good comment on the assessment increase. We have a newly elected director who has been out with the pitchforks and torches drumming up discontent amongst those who listen–the classic low information owner who never attends a board meeting, never reads the newsletter, but is then shocked by an assessment increase. -Bill C.

Dues Increase #3. Before Davis-Stirling allowed the 20% per year increase, I was on the board of an association with 1,800 units and over 1,000 acres of open space that sued the developer. One cause of action was that we were under-capitalized and unable to perform because of a max assessment increase of 3% limitation. -Albert H.

Commercial Website #1. Thank you for the new website. As an insurance agency specializing in common interest developments we refer to the Davis-Stirling website frequently for residential and are thrilled to have the same for commercial. -Barbara T.

Commercial Website #2. Thank you, thank you for your commercial website. I was delighted to find that it has the same ease of use and searchability as your Davis-Stirling website. Not only do I use it but I refer all my commercial clients to it. Keep up the good work! -Jeremy H.

Book Review. Just finished Michael Connelly’s new book “The Gods of Guilt.” He just gets better and better. Let me know if it is true what he writes about how a judge treats a lawyer depending on where he stands in the courtroom. -Mom

RESPONSE: Now I’m curious. I will read the book and let you know.


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 19

I am pleased to announce the launch of CommercialCID.com, a website dedicated to commercial and industrial common interest developments (CIDs).

Unexpected Baby. Although residential CIDs (condos and planned developments) emerged in California in the 1960s (along with the sexual revolution), commercial and industrial CIDs did not arrive on the scene until much later–a surprise baby in an industry that had become middle-aged.

New Home. That unexpected child grew to such an extent that the Legislature pushed commercial CIDs out of their nest in the Davis-Stirling Act and gave them a home in a new section of law dedicated entirely to commercial and industrial CIDs. The new law is called, appropriately enough, The Commercial and Industrial Common Interest Development Act or “Commercial CID Act” for short. Hence, the name of our website: CommercialCID.com.

Easy to Use. As with Davis-Stirling.com, our new website makes navigating the law easy. In addition to fully indexed and cross-linked statutes, it includes material explaining the law and its application, new legislation and emerging case law.

Compared to Davis-Stirling. The first article on our website is by attorney Wayne Louvier who undertook a full analysis of the Commercial CID Act. Wayne’s article describes the similarities and differences between the Commercial CID Act and the Davis-Stirling Act. The statutory references are fully linked so everyone can chart the differences. See Commercial CIDs and the Davis-Stirling Act.

Many thanks to Wayne Louvier for his analysis of the Commercial CID Act. If you have questions, please contact us.

SCANDALOUS
DUES INCREASE

QUESTION: What takes precedence in our governing documents? Our bylaws clearly state our yearly dues CANNOT exceed $36.00 a year, yet the CC&Rs say the board can raise them up to 20% each year. Last year the board raised our dues by 20% and again this year they raised them another 20% so they are now $51 per year. Can they do that?

ANSWER: Asking you to pay 98 cents a week for association services is scandalous. It took my breath away. But then I remembered that boards have a fiduciary as well as a statutory duty to levy regular and special assessments sufficient to perform their obligations under the governing documents and the Davis-Stirling Act. (Civ. Code §5600.) Before you break out the torches and pitchforks, you should review your association’s budget. I suspect the board was forced to raise your assessments to such outrageous levels to deal with deferred maintenance and higher insurance costs.

Hierarchy. You mentioned a conflict between your CC&Rs and bylaws. The $36 annual cap in your bylaws is trumped by the 20% dues increase in your CC&Rs. New Civil Code §4205 states that any conflict between the governing documents sets the priority as follows: CC&Rs, articles of incorporation, bylaws, and then rules. In addition, the “Notwithstanding” language in Civil Code §5605(b) voids the $36 cap, i.e., the statute trumps your bylaws. Either way, the $36 cap is dead.

NAVIGATING TODAY’S
HOA CURRENTS


I will be the keynote speaker at the annual Board Member Appreciation Event hosted by Desert Resort Management. The topic will be “Avoiding Litigation.” I will include real life examples where  associations made decisions that resulted in costly litigation.

Other speakers include Debra Warren, Sr. Vice President of Associa, on management issues, attorney Jon Epsten of Epsten Grinnell & Howell on conflict resolution, and Tom Flavin, President and CEO of the Coachella Valley Economic Partnership on the growth of Coachella Valley.

The event will be held Tuesday, February 4, 2014 from 12:30 to 6:30 p.m. at the Agua Caliente Casino Resort Spa in Rancho Mirage. To RSVP, please contact Julie Harris at (760) 610-7730 or email her at rsvp@drminternet.com.

NO NEWSLETTER. Sorry, no newsletter for the next two weeks. I will be attending the National CAI Law Seminar in Las Vegas followed by a series of meetings. The Law Seminar will explore trends and practices in association law for attorneys, management professionals and other industry leaders. Should be interesting.


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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