Aug 31

QUESTION: When homeowner A locks his car, the horn beeps. Tenant B screams “I will blow that ****ing car up.” So, A locks his car during the day only, not at night. Unfortunately, B works out of his unit and naps during the day so he can work through the night. B is threatening to sue.

ANSWER: Your tenant sounds like an al-Qaeda recruit. First, put the association’s insurance on notice of a potential claim. I know it sounds silly but you need to preserve the association’s rights under its insurance policy.

Investigate. Next, your board has a duty to investigate the complaint and take appropriate action. If the horn really is a nuisance, “A” needs to stop using his remote. He can manually lock his car or have the beep disabled.

No Nuisance. If the board decides that a beep during the day is not a nuisance, the association does not need to get involved in a neighbor-to-neighbor dispute. The board should, however, document its actions and send a letter to the landlord with a copy to the tenant that it investigated the complaint and found no violation. So the board’s cars don’t get blown up, you may want your lawyer to send the letter.

NOTE: I don’t think it’s widely known but God made ear plugs for people with odd sleeping habits. They’re also cheaper than a lawsuit. The landlord should consider making the investment (or get a new tenant).

VOTING RIGHTS


QUESTION: We circulated a ballot to amend our CC&Rs. We had to extend the voting deadline three times to get enough ballots. One owner turned in his ballot and then sold his unit. Must we discard his ballot and issue one to the buyer?

ANSWER: The seller’s ballot is still valid. If he was the owner of record when ballots were distributed, he is the one with the right to vote. The buyer can vote in later elections.

CABLE TV
CONTRACTS

QUESTION: DRE regulations of the Real Estate Commissioner state on page 282 section (E) that cable contracts can be five years. According to your hierarchy of docs, does that trump the CC&Rs restricting any contract exceeding one year ?

ANSWER: As a side note, California’s Department of Real Estate was renamed the Bureau of Real Estate (perhaps to emphasize bureaucratic creep?). The Regulation you refer to is §2792.21 “Reasonable Arrangements–Governing Body Powers and Limitations.” Subsection (b)(1)(E) deals with the length of contracts.

Purpose of Regulations. The purpose of the regulation is to establish reasonable standards for developers to use when they form homeowners associations. A developer’s proposed CC&Rs must meet these standards or they won’t be approved by the BRE.

Hierarchy of Documents. The hierarchy you refer do does not trump your CC&Rs because there is no conflict. The regulation applies to developers of common interest developments and is concerned with  cable contracts that exceed five years. If the developer’s attorney drafted CC&Rs that restrict the board from approving contracts greater than one year and the BRE approved it, you’re bound by the restriction. Your board would need membership approval for any agreement with a term greater than one year.

RECOMMENDATION: Once the developer has sold his units and turned over control to the membership, you can amend your CC&Rs to modify or eliminate contract limitations. We routinely add longer contract periods when we restate documents for associations. It can also be done with a simple amendment. If you want to take advantage of reduced costs associated with longer contracts, you need to amend your CC&Rs. 

S&L BOARD LEADERSHIP
WORKSHOP

All boards are welcome to attend S&L Management’s annual “Board Leadership Workshop.” Attorney Cang Le from Adams Kessler, Michael Berg from Berg Insurances, Mike Graves from SCT Reserve Consultants, and Krystal Walker from Fox & Stephens CPAs will be guest speakers.

The event will be Friday, September 5 from 8:30 a.m. to 3:00 p.m. at Marie Callender’s Restaurant and Bakery in Temecula. Complimentary breakfast & lunch will be served during the program.

RSVP to Rosy Amlani at rosy@slammgmt.com or (951) 698-4030.

EQUITY BOARD SYMPOSIUM
RE: WATER CRISIS


Equity Management is putting on its Annual Board Symposium. There will be a speaker on the water crisis and how it affects HOA communities.

I will be part of a panel for an “Ask the Attorney” discussion related to the drought (and any other legal questions that may arise). This dinner event will be held on Thursday, September 4 from 5:00 to 9:00 p.m. at the Wilson Creek Winery in Temecula.

RSVP to Melissa Walker at mwalker@equitymgt.com or (951) 296-5640.


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.

Aug 17

QUESTION: A condo owner in our building wants to rent his unit on a short-term basis between the times he comes into town. Our CC&Rs state that all units may only be used as a single-family residence. Would this be a violation of the CC&Rs?

ANSWER: Possibly. The shorter the rentals, the stronger the argument that the owner is using his unit for commercial activity rather than residential, which puts him in violation of the CC&Rs. You should have your attorney review the situation to determine if action can be taken. Your best bet is to amend your CC&Rs to set a minimum lease period. I favor one year.

OFFICERS AND
DIRECTORS

QUESTION: Our bylaws require that directors be members of the association. They also state that officers “shall be a President and a Vice President, both of whom shall at all times be Directors, a Secretary, a Treasurer and such other officers as the Board may from time to time by resolution create.” This has been interpreted to allow renters to serve on the board as long as they are not president or vice president. This seems to be an incorrect interpretation of our bylaws.

ANSWER: You’re right, it’s incorrect. People often get tangled up over the distinction between directors and officers. Homeowners elect directors, and directors elect officers. The qualifications for one can be entirely different from the other. Moreover, directors can vote, while officers cannot. When the president votes, he is not voting as president, he is voting as a director.

CC&R Interpretation. In your case, renters can serve as secretary and treasurer. As such, nonmember officers can attend meetings to fulfill their duties (taking minutes and giving financial reports) but cannot sit on the board because they do not meet director qualifications. Accordingly, seven people attend meetings: five directors (two of whom are officers) and two renters (both of whom are officers) but only the five directors make motions, deliberate and vote. For more information see: Director-Officer Differences.

ASSOCIATION’S
LEGAL COUNSEL


QUESTION: Can I contact the HOA’s legal counsel to verify an issue? I have been told my concerns are being presented to the lawyer for review and advice. Do I have the right to contact the law firm to verify this or to ask questions?

ANSWER: No, not really. Association attorneys represent the association as a corporate entity, not individual owners (nor individual directors). Unless the board authorizes the attorney to speak to you, it’s unlikely she would.

Two Problems. If the attorney takes your call, it creates two potential problems. First–who pays the bill? Second, if the attorney gives you any legal advice, it poses an ethical conflict for the lawyer if your interests become adverse to the association’s. As a result, HOA legal counsel will rarely take calls from homeowners.

FEEDBACK

Herb Garden #1. Your recommendation re “Herb Garden” is a hoot! Your newsletter is such a painless way to get our dose of Association reality. Keep up the great work! -Nancy H.

Herb Garden #2. Use common sense as Judge Larry S. suggested?? Judging from events at home and abroad, I’d say that ship sailed long ago. Maybe too many trips through the herb garden by those in control?? -Wayne W.

Herb Garden #3. I have to email you! Thank you for making me laugh this morning with your response on the herb garden question. I can’t stop laughing, maybe because I don’t cook. -Lorna L.

Herb Garden #4. Your tongue in cheek remark about being nice to anyone who smokes your herbs is lost in a haze of smoke! I suggest you stick to legal advice and leave the humor to the late night pros. -Tom D.

Herb Garden #5. Too funny! -Kit C.

Herb Garden #6. The board should review with their insurance professional the “Products and Completed Operations Hazard” coverage included in the typical HOA liability policy. While the “product” of herbs grown by the HOA may be considered covered, the policy language typically limits coverage to consumption away from premises owned by the insured. The caveat is coverage for goods and services designed for consumption on premises if that is the type of business the insured is in. As such, injury caused by food borne illness may not be covered if the HOA is the provider of the product. -Michael Berg, MBA, CIRMS, CMCA, Berg Insurance Agency

RESPONSE: Insurance is a riddle wrapped in a mystery inside an enigma.

*****

Election Tampering. Another option is to put the remaining directors on notice that if they don’t do something they would be in breach of their fiduciary duties. Next, I would confront the alleged offender with benefit of counsel in executive session and ask him/her for their resignation and then threaten to bring civil action for violation of the association’s rules. Third, I would notify the D&O carrier of the possible breach. I think they would be seriously concerned about coverage of an association that looks the other way when there is serious breach such as this. -Doug C.


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.

Aug 10

QUESTION: Can our association be at risk for planting herbs in the common areas if someone eats them and becomes ill? Will our insurance cover us?

ANSWER: For those under thirty who get their meals from a drive-through window, “herbs” are plants used for flavoring foods. Cooks use the leafy parts of the plant. Can an association be at risk if they plant an herb garden? That’s unlikely.

The negligence standard applied to this issue will look to a foreseeable risk of harm. Is it foreseeable someone will pluck leafs from the plants and use them in their cooking? Yes. If is foreseeable they will keel over and die? No. Could they get an upset stomach? If they’re a bad cook, maybe. Could someone roll them into a joint and smoke them? With kids today, anything is possible. Is it probable? No.

RECOMMENDATION: I don’t see a problem with planting an herb garden. Since you raised insurance concerns, call your agent to see if the policy has an exclusion for herbs. I can’t imagine it does. Also, be nice to anyone who smokes your herbs, they could be the next president of your association…or the United States. You never know.

BALLOT TAMPERING

QUESTION: We have a director who was caught alone with ballots, shredding envelopes and making identifying marks on the inner envelopes. Can you shed some light on ballot tampering and what we can do if the director is elected to the board?

ANSWER: It’s appropriate that your question falls on the 40th anniversary of Watergate.

Election Standards. The California Legislature set clear election standards for tamper-free elections. It did so by requiring double sealed-envelopes (Civ. Code §5115), independent inspectors of election (Civ. Code §5110), and public opening of  ballots and tabulation of votes (Civ. Code §5120). Associations are also required to adopt election rules to meet these (and other) standards. (Civ. Code §5105.)

RECOMMENDATION: If election shenanigans are discovered and the director gets himself elected, the membership has four options:

1. The easiest is to sit on their hands and do nothing. This is popular in many associations but tends to be costly–a director without ethical standards running the association.

2.  The next option is to demand a recount and an inspection of the ballots. (Civ. Code §5125.)

3. A third option is to initiate a recall. If the evidence is clear, the membership can vote the scoundrel out of office. This requires a lot of energy, especially if you have cumulative voting.

4. Assuming the evidence is strong, members can bring a civil action for injunctive relief to void the election and order a new one. (Civ. Code §5145.) This requires a lot of money. However, it may be possible to take it to small claims court. If so, the cost would be minimal.

Thank you to attorney Cang Le for his work on this question.

WHAT HOA ATTORNEYS
NEED TO KNOW


Attorney Cang Le will be in San Francisco speaking to other attorneys on August 22, 2014 at the Practicing Law Institute’s program on homeowners associations.

Cang will address the legal structure governing HOAs and key management concerns for resolving conflicts between HOAs and owners. For more information, see Practicing Law Institute website.

FEEDBACK

Legal Advice #1. I love this newsletter. There are reasons to ignore an attorney’s advice. One reason is if the advice is clearly incorrect (or if the attorney does not carefully explain why they think they are correct when we think they are wrong). -Bert D.

RESPONSE: Also, if it’s clearly wrong, it may be time to get a new attorney.

Legal Advice #2. It behooves anyone making decisions to weigh the attorney’s advice along with any and all other information they have gained over a lifetime before putting their fame or fortune at risk. As I always told the jurors in my court: “You are not required to leave your common sense outside the courtroom. Bring it with you. You are the eyes, ears, and conscience of the community.” So too are board members “the eyes, ears, and conscience of their HOAs and the people who live and work there.” They should listen to everybody all the time, including the attorneys but not exclusively to the attorneys. -Larry 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.

Aug 03

QUESTION: A new board wants to review the executive meeting minutes for the last two years. Only one member of this five member board is an incumbent. Does the new board have the right to review another board’s executive meeting minutes and if so, how far back can they demand?

ANSWER: With some narrow exceptions, all board members have the right to review all executive session minutes as far back as they want to go. It does not matter that they were not on previous boards.

Exceptions. Minutes are the historical records of the corporation. By statute, directors have the right to review them. Even so, despite the broad language in the Corporations Code, the right is not absolute. Courts have carved out exceptions involving privacy issues and conflicts of interest.

RECOMMENDATION. If your board has concerns about records as they relate to a specific director, they should talk to legal counsel.

HOARDING WEBINAR
FOR MANAGERS

Attorneys Jasmine Fisher and Cang Le will be presenters in a Webinar Series for managers put on by the California Association of Community Managers. The topic will be “Boxes, Bugs and Blights: How to Combat Hoarding in HOAs.”

The webinar will provide managers with an in-depth review of what qualifies as hoarding, provide strategies for dealing with hoarders, and identify resources that can be used.

The webinar will be held on August 19 from 11:00 am to noon. All community managers are invited to attend. CCAMs earn 1 CEU. Learn more and register at CACM Webinar Series.

FEEDBACK


Ignoring Legal Advice. I found your article extremely interesting. I’m afraid some will take your comments to mean boards can ignore  advice they disagree with. Could you please clarify what you mean? -Marc B.

RESPONSE: A careful reading of my article would not lead to that conclusion. But, I have no doubt some  knucklehead on a board somewhere would do just that or, in the alternative, advocate attorney shopping until he gets the opinion he wants.

Clear Direction. A good HOA attorney will always tell directors what they need to hear, not what they want to hear. Some legal opinions are crystal clear, “No, you can’t do that!” Or, “If you want to call a meeting, here is what the law requires.”

Options. Many times, however, boards are presented with options–Option A or Option B (and sometimes, Option C). The board must then weigh the risks and rewards of each and make a business decision. The attorney might recommend Option A. But, because they are all viable options, the board might weigh factors differently and choose Option C.

Business Judgment. Did they just ignore legal counsel and breach their fiduciary duties? No, they listened, weighed the choices and arrived at a different conclusion. Is it possible there could be fallout? Certainly. If Option C goes badly, so could the membership. Nonetheless, directors are protected from personal liability if they followed the Business Judgment Rule.

*****


Citizen’s Arrest #1.  I wish ALL would follow Linda H’s way of thinking before barking! Common sense is good for the mind and it’s actions. As for George G. and his remark, that is what a newsletter is intended for, helping and protecting no matter what the topic is. It is disturbing if you think this behavior should be on display for all eyes young and old. -Steve C.

Citizen’s Arrest #2. Judging from George G’s remarks, he must engage in the same behavior as the neighbor in the next building. -Will B.

Citizen’s Arrest #3. My comment for George G: If he is exposing himself publicly even through his window he is not “legally viewing” and obscenity and indecency are “illegal content” per the Supreme Court. So I think AK is giving sound legal advice. -Rich S.

Citizen’s Arrest #4. Perhaps George G. might be the one viewing the “legal” movies with his drapes open! He should be the one ashamed of himself! Thanks for my laugh this morning! -Nat R.

*****


Empty Pool. Our HOA considers the pool water a good source for non-potable needs during a disaster.  -John M.

RESPONSE: A valid consideration. An earthquake could rupture water lines with a complete shutdown of the system (as just happened in Los Angeles with a loss of 20 million gallons of water), leaving homeowners with no water for days or weeks. A pool full of water could be a Godsend.


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.

Jul 27

QUESTION: If the association sought and paid for a legal opinion, is the board violating their fiduciary duty if they ignore the opinion?

ANSWER: If board members stick their fingers in their ears and refuse to listen to legal counsel, that’s a problem. But, if they listen to the attorney’s advice, weigh it against other factors and reach a different conclusion, they are not in breach of their fiduciary duties.

Independent Decision. Boards are not required to let experts and lawyers make decisions for them. For example, an attorney and a termite expert might both advise a board to tent their condo buildings to stop a termite infestation. After taking into account the cost of tenting, the financial condition of the association, and the disruption to members who must be moved out of their buildings, the board can decide to spot-treat even though tenting is the superior method.

Business Judgment. This was the scenario in a case that made it all the way to the California Supreme Court. The Court sided with the board and held that,

where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion…to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise. (Lamden v. La Jolla Shores; Corp. Code §7231(a).)

Bad Advice. A second scenario under which boards can deviate from legal advice is when they believe the attorney is not knowledgeable or reliable in the issues presented. For example, if a divorce lawyer offers legal advice about HOA corporate matters, the board can (and should) disregard the advice. Instead, they should seek counsel from an experienced corporate attorney with expertise in community association law.

RECOMMENDATION: Boards should be cautious about discounting competent legal counsel. If directors are uncertain about the advice given, they should get a second opinion.

 

FEEDBACK

Empty Pool #1. “Finding a body at the bottom of an empty pool has a way of driving down property values. Plus there is the problem of cleaning up the mess.” Love your wry humor. -Kit C.

Empty Pool #2. I see that you have wisely drawn upon the expertise of a professional (Design Build Associates) who clearly understand the physics of what might happen if an HOA were to drain its swimming pool. Thanks to you Adrian and your staff for your right-on response to this question! -S. Ross

Empty Pool #3. Instead of draining the pool, a pool cover can save a lot of water and heat. With the water shortage and the price of water increasing, they may be worth it. There are products that claim to inhibit evaporation and thus save water and heat. One such product is the ECOSAVR. -Harvey C.

Empty Pool #4. Another consideration is fire danger. Is the pool likely to be a source of water during an fire? -Dennis F.

Empty Pool #5. Our association had considered draining the pool but dismissed the idea because of advice from a soils engineer. What he suggested, which seems to be working, is putting a cover over the pool when not in use. It’s bit of a hassle but seems to be worth it in terms of slowing evaporation and the resultant costs. -Nancy H.

Empty Pool #6. How do people with double-digit IQs get through life? If we drain our three pools, does the water go into a little private aquifer account, with some of it allotted to the potable water bins? How does draining a pool save water? Our pools were drained seven years ago for, as you pointed out, replastering and to repair some leaks. Other than that, they cost us little in water use. I’m flummoxed. -Linda H.

******

Social Events #1. It is my understanding that board members attending the “Coffee Klatch” are prohibited from discussing association business as this constitutes a violation of the Open Meeting Act. -M.H.

RESPONSE: You’re correct. A quorum of the board cannot attend a coffee klatch if board business will be heard or discussed. That would turn the social gathering into a board meeting (Civ. Code §4090(a)), which would require proper notice to the membership and posting an agenda (Civ. Code §4920(a)).

Social Events #2. Anyone who disputes what their board does, needs to run for the board instead of just complaining, that’s what I did. -Alice O.

RESPONSE: If people can’t complain, they wouldn’t have anything to talk about. That would be distressing.

*****


Citizen’s Arrest #1.
Regarding lewd acts in the neighboring building, his unit can probably be seen from several units and floors. Who knows when a child may be visiting. He is obviously aware of the situation as he increased his exposure after being told. I would have the police intercede as it should be considered public if being done in a way that it is purposely visible to others. If warned and repeated it could go down as a lewd act and, although maybe a misdemeanor, may be upgradable after a couple of times. This yo-yo could end up as a Penal Code §290 registrant. -Emile R.

Citizen’s Arrest #2. I generally find the newsletter refreshing and often helpful but this week I just find it wrong and objectionable and find it difficult to believe that your firm would put something like that out there. I can not believe that a law firm would choose to call a person who is legally viewing legal content on their own TV a miscreant. Are you really that judgmental and that prudish that you feel free to insult someone for doing something you may not find to your taste yet completely legal? Really too bad! I think you should be ashamed of yourselves. -George G.

Citizen’s Arrest #3. Why not get someone (with a strong stomach) to videotape what’s going on across the way? If the miscreant knows he could be “exposed” for what he is in a court of law, including all his “shortcomings,” he might think again. Also, are there children in the building who have a view of his antics? Seems like a follow-up in that quarter might be helpful. -Nancy 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.

Jul 20

QUESTION: Since we are in a severe drought and our members barely use the pool, are we obligated to keep it open? It seems like a waste of water and money and we would like to drain it. Does the board have the authority to close the pool?

ANSWER: If they have good reason, boards can close and drain a pool. Often it’s done when a pool needs to be replastered. The closure is short-term and the pool refilled with water. Your scenario is different since the closure would be long-term. Doing so could damage your pool.

In-Ground Pools. In-ground fiberglass and concrete pools are built to withstand the pressure of dirt against them when drained. Even so, ground pressure on fiberglass pools can cause side walls and floors to bulge and split. If ground water is high enough, hydrostatic pressure can cause an empty concrete pool to act like a ship and float several inches. This will break the coping/bond beam and damage the surrounding decks and pipes. Insurance does not cover such damage.

UV Damage. Pools built on solid concrete foundations or in a concrete vault are immune to hydrostatic pressure. However, they are not immune to solar damage. Direct sunlight will dry out plaster, causing spider cracks and tiles to pop off. When the pool is eventually refilled, water will seep into the cracks causing the plaster to blister and crumble. This is also not covered by insurance.

Safety Issues. The possibility of someone taking a swan dive into an empty pool should keep boards up at night. Associations that drain their pools should make sure they lock their gates and post warning signs. Even so, drunks have been known to climb fences for midnight swims. Finding a body at the bottom of an empty pool has a way of driving down property values. Plus there is the problem of cleaning up the mess.

RECOMMENDATION: Before an association drains its pool to save money, the board should talk to a pool construction expert, their insurance broker, and legal counsel.

Thank you to Les Jillson of Design Build Associates Construction Management for his valuable insights on this issue.

CITIZEN’S ARREST

QUESTION: Our highrise building looks onto another highrise where a resident regularly watches porn on his big screen TV. We asked the neighboring building manager to encourage him to lower his shades. This had the opposite effect. He now leaves his shades completely open, watching in the nude and single-handedly participating. Do we have any recourse?

ANSWER: That is an ugly visual. If the porn junkie is in a building that is not part of your association, your options are limited.

Police. The police can be notified. They will talk to the resident but not arrest him unless they witnessed the illicit activity. To arrest him, you would have to accompany the police to the building and make a citizen’s arrest. Penal Code §837 states, “A private person may arrest another: (1) For a public offense committed or attempted in his presence…”

Public Offense. A “public offense” is defined as a felony, misdemeanor or infraction. (Penal Code §16). Is your neighbor’s behavior a public offense? According to California Penal Code §647(a), engaging in lewd conduct in a public place is a misdemeanor.

The catch is the “public place” part of the statute. Lewd conduct by a lone adult in the privacy of his home wouldn’t normally interest the police or the courts. In your situation, your neighbor is knowingly making his conduct visible to his neighbors. Accordingly, action can be taken.

RECOMMENDATION: Before you rush over and make a citizen’s arrest, you should consider the possibility of retaliation. It’s clear your lewd neighbor does not have any boundaries. If a visit by the police does not resolve the problem, your best bet may be a strongly worded lawyer letter to the miscreant.

FEEDBACK

Social Events #1. When I bring a buyer to show homes, the number one impression is the curb appeal of my community and not social events the association is providing once or twice a year. Money is better spent on beautifying the neighborhood. The goal of the Davis-Stirling Act is keeping home values at the highest possible price by the principle of uniformity and not social events. -Aniko S.

Social Events #2. Three members of our board hold a coffee klatch “social event” every day for two to three hours beginning at 7 a.m. Although it’s open to all residents, it is the same clique of seven or eight people–board members and their spouses and friends. Owners have complained that this type of chit-chat could be held in their private residences, to no avail. The coffee klatch does not create a sense of community, it creates divisiveness, especially at a time when the HOA is strapped for funds needed for dire deferred maintenance repairs in the common area. -Christine B.

RESPONSE:
I suspect the other side will argue that the coffee klatch has a positive effect and the cost is negligible, i.e., the cost of coffee grounds. But, if the community has not embraced the concept, it may be time for the board to reevaluate its utility.

Social Events #3. Relationships are the glue that hold an HOA community together. If the social event dollars are disclosed to the members in the annual budget and the budgeted dollars are a small percentage of the total budget then, yes, hold the social events and build that community feeling. -Phyllis 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.

Jul 06

QUESTION: Can the board use association funds for social events? Our CC&Rs are silent on the subject.

ANSWER: Unless governing documents specifically prohibit it, HOAs can budget for, assess and spend association monies on social events.

Generic Language. More often than not, there is generic language in governing documents allowing associations to make decisions for the “general health, welfare, comfort and safety” of the membership. A variation is: “The Association may undertake any lawful activity, function or service for the benefit of Owners.” Authorizing language is often found in the preamble of the CC&Rs, in addition to the general powers section, and in the assessments section describing the purpose of assessments. It can also be found in the bylaws and articles of incorporation.

Social Event Benefits. Do social events fall under “health, welfare and safety” categories? I believe they do. Part of being a community is knowing your neighbors, interacting with them and developing a positive community identity. Social events help make that happen. Knowing your neighbors also enhances general security for the association. Finally, developing a reputation for a positive community identity raises property values.

RECOMMENDATION: As in all things, moderation. Boards should not go overboard with extravagant parties. HOAs should also be careful about alcohol at their events and check into insurance. Then get everyone together and have steak and beer or cheese and wine, depending on your political persuasion. (I prefer both…does that make me an Independent or simply indecisive? I can’t decide.)

WILLIAM S. DUNLEVY, ESQ.
JOINS ADAMS KESSLER


I am very pleased to announce that attorney William Dunlevy has joined Adams Kessler as Of Counsel.

Community Ties. A native of California, Bill has been a mainstay of the Ventura County community for over thirty years. His wife taught in public schools in Oxnard and his son is a Deputy District Attorney for the County. Bill has been a long time member of the Ventura Lions Club where he served as President, District Governor and then Chairman of the California Council of Governors.

CAI. Bill’s 29-year involvement with the Channel Islands Chapter of the Community Associations Institute has been a boon to the Chapter. Bill served multiple terms on its board of directors and twice as President. He was the founding editor of the Chapter’s highly acclaimed magazine Channels of Communication and served as editor for 26 years. He has twice been honored as Author of the Year and three times received the prestigious Distinguished Service Award.

HOA Law. Bill Dunlevy is a veteran community association attorney with over 35 years experience. He serves as legal counsel for associations in Ventura, Kern, Santa Barbara, San Luis Obispo and Los Angeles counties and provides service in all areas of community association law with an emphasis on governing document interpretation and enforcement, alternative dispute resolution, governing document revision, business advice, corporate affairs, contract review, common area repair planning, and litigation.

Education. Bill graduated with highest honors from UC Davis with dual majors in history and political science. He is a member of the Phi Beta Kappa and Phi Kappa Phi national honor societies. After graduating from Davis, Bill went on to earn a Juris Doctorate from UCLA Law School.

Contact Us. Bill Dunlevy is a significant addition to the firm. We welcome his broad knowledge and experience in HOA law. To request a proposal for legal services, contact us by email or by phone at (800) 464-2817.

FEEDBACK

Drought #1. Adrian … you crack me up with “pray for rain.” -Kurt V.

Drought #2. Be careful what you pray for–remember 2005? -Bill

RESPONSE: Below is a chart of average annual rainfall for Ventura County. The red line is the average. As you can see, we are in a serious drought. I’m thinking maybe three years of rain like 2005 is in order.

Drought #3. As always another great newsletter. Thank you for your service to HOAs all over California. The state has stopped watering the capitol lawns and removed seasonal plantings during this drought. The once beautiful grounds are looking thread bare right now. Home owners and associations should be setting aside the money they save from not using water to bring back plantings and lawns when the drought ends (which it will). -Paul C.


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.

Jun 22

QUESTION: Can the board deny a homeowner entry and exit by not allowing them to purchase a remote?

ANSWER: They can’t deny ingress and egress but they can deny a remote, depending on the circumstances. If you’re delinquent in your assessments, the association can suspend your privileges. One of those privileges may be the use of a remote to open the front gate. As long as you have another means to open the gate such as a keypad, the loss of the remote is a mere inconvenience. Those who pay for the convenience, receive it. Those who don’t, don’t.

Street Parking. If, however, there are no other means of opening the gate, the denial of a remote becomes murky. You can still park on a public street and walk to your unit (assuming you have a key to the pedestrian gate). That means you still have ingress and egress. You just can’t drive on the association’s streets because you no longer contribute to the maintenance of those streets (or the maintenance of the gates or anything else). This is more aggressive and its enforceability less clear. By analogy, California won’t suspend your drivers license for unpaid taxes but they will ground your car for unpaid registration fees and fine you if you drive it.

Reckless Driving. If your driving has endangered the safety of other residents, the board can suspend your driving privileges for an appropriate period of time. You still have the right of ingress and egress via taxi, bicycle, walking, etc. You just can’t drive. That’s no different than the State of California suspending your license for recklessly driving on public streets. Driving is a privilege not a right. Following due process, your driving privileges can be suspended.

RECOMMENDATION: If your board suspended your privileges because they don’t like the tie you wear, it’s time to call a lawyer. If you’re delinquent, stop whining and pay your bills. If you’re a reckless driver, stay out of my neighborhood; I would prefer not to get run over.

RUSSELL W. HIGGINS, ESQ.
JOINS ADAMS KESSLER

I am pleased to announce that Russ Higgins has joined Adams Kessler PLC.

Legal Experience. Russ has a diverse legal background. It started with ten years managing civil and criminal caseloads. In his criminal defense work, Russell handled case evaluations, plea negotiations and litigation, briefing and trials. This included criminal appeals and a death penalty case. A fellow attorney recognized Russell’s courtroom talents and his ease with people and urged Russ to transition into community association law. Russ investigated the strange world of common interest developments and made the move.

Community Associations. Before joining Adams Kessler, Russ spent the past five years sharpening his legal skills on corporate law for community associations. He worked with boards and managers on vendor contracts, revised governing documents, pursued delinquent assessments, attended board and membership meetings, investigated insurance coverage issues, drafted legal opinions on disability and architectural compliance, and immersed himself in a wide range of matters affecting associations both residential and commercial.

Litigation. Because of his strong litigation background, Russ has been working with boards to minimize unnecessary litigation. When appropriate, he steers matters into mediation and arbitration. In the event litigation is unavoidable, he uses his courtroom skills to obtain favorable outcomes for his clients.

Education. Russ holds a bachelor’s degree in literature from Auburn University in Auburn, Alabama. He earned his Juris Doctor from Pepperdine University School of Law in Malibu, California, graduating cum laude. Russ won multiple awards and commendations from both institutions and served as a senior staff member of the Pepperdine Law Review.

Russ Higgins is a rising star and an excellent addition to our team. If your association needs a proposal for legal services, feel free to contact us by email or by phone at (800) 464-2817.

THE DROUGHT

QUESTION: In light of Governor Brown’s executive order related to the drought, can HOAs enforce their CC&Rs requiring owners to maintain their property in a neat appearance?

ANSWER: Due to the severity of the drought, on January 17 Governor Brown declared a state of emergency and imposed numerous restrictions. This was followed by an executive order on April 25, which contained the following:

Homeowners Associations (commonly known as HOAs) have reportedly fined or threatened to fine homeowners who comply with water conservation measures adopted by a public agency or private water company. To prevent this practice…I order that any provision of the governing document, architectural or landscaping guidelines, or policies of a common interest development will be void and unenforceable to the extent it has the effect of prohibiting compliance with the water-saving measures contained in this directive…

Impact of the Order. While saving water (a good thing), the executive order has had a negative impact on HOAs. In addition to dead lawns, some homeowners are allowing everything to die–flowers, shrubs, bushes and trees. Dead landscaping is obviously unsightly and makes homes less attractive. It also makes them less marketable, not only for owners with dead landscaping but also for neighbors. The result is lower property values.

Owner Compliance. Associations still have some control. They can require that owners pull weeds and keep their lots neat and clean. They can also force the removal of dead plant material and the installation of drought tolerant plants so lots aren’t barren wastelands.

Drought Measures. When it comes to common areas, associations should move to drought tolerant plants and install more efficient landscape irrigation systems. Where feasible, associations should consider using recycled water for landscaping and cooling towers. Those with golf courses and small lakes may want to drill a well (first check with a lawyer).

RECOMMENDATION: Pray for rain.


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.

Jun 01

QUESTION: Our bylaws have only one qualification for serving on the board–that directors be members. By a rule change, the board added a new requirement that a director’s primary residence must be in the development. The change eliminates 40% of the membership from holding office. Some believe the president took this action because of disagreements with individuals who do not live in the complex who may run against her. Doesn’t a change like this need a vote of the membership?

ANSWER: Because of a recent court decision, it appears that boards can unilaterally add new director qualifications without input by the membership.

Friars Village. Friars Village HOA had only one qualification for serving on the board, the nominee had to be a member of the association. The board adopted a rule that no one could serve on the board with another director related by blood or marriage. It’s a good requirement but it was done without membership approval. A homeowner sued in small claims to invalidate the rule since it was inconsistent with the bylaws. The board moved the dispute to superior court and the case ultimately ended up in the court of appeals.

Reasonableness Requirement. The court of appeals concluded that boards have the authority to adopt additional director qualifications without the need to amend the bylaws, provided the qualifications are “reasonably related to the performance of the Board and will serve to protect its overall mission — protecting the best interests of the Association.” (Friars Village Association v. Hansing.) I’m not comfortable with the court’s decision but it’s now the law.

Residency Rationale. Is the residency requirement adopted by your board reasonable? Probably. The argument in favor of residency is that board members who live in your development will have a stake in the community and will be more inclined to act in the best interests of the membership.

RECOMMENDATION: Despite the arguments for a board-imposed residency requirement, a judge could easily decide that disqualifying 40% of the membership from serving on the board is not reasonable. Therefore, the safer course of action is to seek membership support for new director qualifications and then amend the bylaws. Doing so reduces the risk of a legal challenge and an adverse ruling.

CUMULATIVE
VOTING


QUESTION
: Thanks to cumulative voting, an attorney whose home was heading into foreclosure got herself elected to the board. She then sued the board for failure to enforce the CC&Rs. She then demanded the association’s insurance represent her as she was doing this “for the good of the community.” Our insurance company declined with the explanation that “We don’t pay for people to sue us.” It makes one wish there was some kind of entrance exam before becoming an HOA owner.

ANSWER: As someone once noted, “Common sense is like deodorant–the people who need it most never use it.” The scenario you describe is exactly why associations should amend their bylaws to eliminate cumulative voting. It helps to keep some of the more ethically challenged owners off the board. Or, if they happen to get elected, they can more easily be removed by the membership.

FEEDBACK

Damaged Driveway #1. Could it be that the money charged the member for the damaged common driveway will be applied to the road update expenditures when the driveway is repaired along with the rest of the road maintenance for the year? That would be a logical board decision, if safety were not a factor. I would question whether the member was charged the full cost for bringing in the necessary equipment to do a road repair to a driveway. I’ve found that boards tend to be misjudged by members lacking the full story. -Jim G.

RESPONSE: I agree, if it’s not a safety issue and if larger-scale driveway maintenance is already planned, it makes sense to put a hold on an individual repair. Sometimes, even safety issues can have a temporary or “band aid” fix while the board puts together a larger program of repairs. As long as boards use good business judgment, some repairs can be delayed.

Damaged Driveway #2. I wish you would have been more careful how you framed your argument. Lawsuits do not hurt the board of directors. THEY HURT THE ASSOCIATION. So, while you might get results with a lawsuit, you should also point out that this should be a course of last resort. Unless you enjoy shooting yourself in the foot. Penalizing “for profit” General Motors is not the same as penalizing a “not-for-profit” board. People need to remember that money for legal fees and settlements come out of owners pockets even if D&O insurance covers some or all of it. Even when insurance pays, you pay later in premium hikes. In the end the association is the loser. -Jeffrey S.

RESPONSE: Take another look at last week’s answer. The point of mentioning lawsuits and fines was to highlight the danger of not making repairs. Plaintiff’s attorneys are often too aggressive and make overblown claims, which associations must spend precious time and money refuting. Because litigation is almost always too expensive and too unpredictable, boards should take care to avoid it whenever possible.

Paid Directors. Wonderful responses! Our secretary/treasurer has collected a “stipend” of $4,000 a year for 25 years and claims to not be a member of the board and that this stipend isn’t a salary (although it shows as such on tax returns). Thanks again for your very informative newsletters! -Julia C.

NO NEWSLETTER. There will be no newsletters for the next week or two. While everyone else is taking vacations, I will be working on a case preparing for trial. Okay, I’m done whining.


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.

May 25

QUESTION: My association billed a resident for damage he caused to a common area driveway. The resident paid but the board intends to keep the money without making  repairs. Any thoughts?

ANSWER: Although there is nothing directly on point about taking money for one purpose and using it for another, the statute “Thou shalt not…” comes to mind—it’s quite authoritative. (Bible, Commandment #8.) The Davis-Stirling Act also comes into play, i.e., association’s are obligated to repair and maintain the common areas. (Civ. Code §4775(a).)

Unsafe Condition. Moreover, if the damage is safety related, I’ve found that juries tend to punish boards who have a a known unsafe condition, do nothing and someone is injured. General Motors is well acquainted with the concept. For some reason, they thought it was a good idea to ignore defective ignition switches. Last week they were fined $35 million. That’s in addition to the enormous legal expense to defend and settle a slew of lawsuits and the cost to replace 2.6 million ignition switches.

Cosmetic Damage. If the driveway damage is purely cosmetic, the board could choose not to make the repair and sit on the money. But that would likely create unhappy homeowners.

CHANGING
MAINTENANCE DUTIES

QUESTION: Is a 75% vote of mortgagees as well as owners required to amend maintenance obligations of CC&Rs?

ANSWER: That depends entirely on the amendment requirements in your CC&Rs. Amendment provisions are normally found in a paragraph at the tail-end of your CC&Rs. It spells out the voting percentages for owners.

In addition, you need to check the mortgagee (lender) provisions–often an entire section toward the middle or end of your CC&Rs. It will list any categories of changes requiring their approval (which might include any changes to maintenance obligations).

FEEDBACK

Paid Directors #1. Please inform me of the name of the complex that pays their board members. I am already packing and ready to move. And to the grouch with no sense of humor NUTS TO HIM! Thanks for your weekly informative e-mails and do not lose your sense of humor. With much appreciation. -Gloria F.

Paid Directors #2. Our board of directors/officers, receive a monthly stipend. All directors are elected by the owners of our association. They are not volunteers. Should we stop paying stipends? -T.C.

RESPONSE: “Stipend” is merely a euphemism for paid directors. If it were me, the stipend would have to be REALLY big to make it worth the risk I take on as a paid director. It’s like robbing a bank for $50. It doesn’t make any sense; the risk outweighs the reward.

Nuts on the Board. From where we stand, most associations are so dysfunctional that members stay as far away as possible from the headaches of participation because “nut jobs” who get themselves permanently planted on boards. -Teresa A.

RESPONSE: The worst case scenario for the membership is a board with truly bad directors. I believe it was Edmund Burke in the 1700s who wrote that, “The only thing necessary for the triumph of bad directors on HOA boards is for good members to do nothing” (or something to that effect). Fortunately, bad boards are the exception not the rule. Most boards have good people doing their best under difficult circumstances.

Corporate Proxies. Corporate vs. HOA proxies–OK, what if your HOA is a corporation as well? Which statute controls in that case? -Robert M.

RESPONSE: The Davis-Stirling Act.

Thank You. Thank you for your personal help and a wonderful internet site. It has been fascinating watching your business grow during the past ten year I’ve lived in this condo. -Dick S.

RESPONSE: It’s been my pleasure providing the service.


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.