Condo Law in California

In a just released case, the Court of Appeal ruled that management companies are allowed to profit on transfer fees charged in escrows.

Plaintiff argued that management companies violate the law when they charge excessive document fees and transfer fees whenever a home or condominium is sold. Plaintiff claimed that Civil Code §1368(c) prohibits associations (and their managing agents) from charging a fee greater than their actual cost to reproduce documents or to transfer title records:

neither an association . . . or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title . . . except for . . . An amount not to exceed the association’s actual costs to change its records.

The court disagreed. It pointed out that the statute prevents associations from charging inflated fees, not managing agents. The court commented that competitive forces, not the statute, will constrain a vendors’ fees and charges. Berryman v. Merit Property Management, Inc.

This ruling is similar to a 2005 case involving collection fees.

There was a time when boards were advised to stay out of neighbor to neighbor disputes. Unfortunately, the legislature and the courts have increasingly pushed associations into the role of resolving disputes internally. This seems to extend even to claims of harassment, threats, and physical altercations. There are four lines of reasoning for the board’s duty to intervene.

Nuisance. Owners have a general right to peacefully enjoy their property. Because associations have the power to impose fines and suspend privileges, boards have a duty to intervene under the nuisance provisions of their CC&Rs to stop owners from disturbing the peace.

Health and Safety. In addition to nuisance restrictions, most documents contain general statements that the association’s purpose is to provide for the health, safety and welfare of the membership. If an owner poses a threat to other members, the board may have a duty under these provisions to protect the membership from such threats.

Landlord Tenant Relationship. Under landlord-tenant law, landlords must protect members against foreseeable harm and provide for quiet enjoyment by curbing a tenant’s disruptive conduct. California’s Supreme Court has already compared associations to landlords and owners to tenants. That analogy will likely carry over to a board’s duty to protect members from an abusive, harassing or threatening owner.

Fair Housing Act. Duties may also be imposed by federal law. In a Washington D.C. case, a female owner was harassed by her neighbor who allegedly shouted racial epithets and made sexual comments to her. The woman asked her condominium association to take action to stop the harassment. The association wrote letters to the neighbor but took no further action. The woman sued the association alleging violation of the Fair Housing Act because it failed to take action against her neighbor. When the federal district judge ruled that the association could be held liable for its inaction, the association settled the case by paying the owner $550,000 and buying her condo. Reeves & The Fair Housing Council of Greater Washington, Inc. v. Carrollsburg Condominium Owners Assoc. (D.D.C. 96-02495)

RECOMMENDATION. Boards should hold hearings with feuding neighbors and make it clear that any disruptive behavior such as loud stereos, banging on the walls, shouting matches in the common areas, etc. will result in fines and suspension of privileges (as provided for in the governing documents). If the board determines that an owner is a threat to other residents, the board may have a duty to take further action, such as seeking a restraining order. When faced with these kinds of situations, boards should seek legal counsel.

QUESTION: I am widowed with a large unit. My monthly dues are higher than everyone else even though I barely use use the facilities. Is this legal?

ANSWER: There is nothing illegal about disproportionate assessments. The allocation is set by the developer when the governing documents are created. CC&Rs will generally allocate assessments in one of three ways:

1. Pro Rata. Pro rata (Latin, “according to the rate”) refers to dividing monthly assessments by a percentage assigned to each unit or lot. This is usually by square footage. Even though payment of assessments are disproportionate, the courts have found that such payment schedules are not unreasonable and do not violate public policy. Cebular v. Cooper Arms Homeowners Association

2. Uniform Rate. Members pay the same amount regardless of the size of their units/lots.

3. Blended Rate. Assessments are assigned using a uniform rate for some budget items and a percentage rate for others. This method tries to allocate expenses by usage so that large units pay more for services that provide greater benefits to larger units.

Changing Assessment Allocations. Changing an association’s assessment structure requires an amendment to the CC&Rs. Our firm has helped associations navigate the process but there is no guarantee the amendment will pass. Changing the structure means increasing assessments on some units and lowering it for others. Owners with increased assessments generally vote against the change.

The resolution by attorney Tina Rasnow to void clothesline restrictions throughout California generated a strong response. Readers were against the resolution by a factor of 7 to 1.

Of the responses, 31 were in favor of Ms. Rasnow’s proposal, 155 were against it, and 57 were against the proposal as currently structured but expressed limited support if the clotheslines were not visible or had other kinds of restrictions.

IN SUPPORT. Following is a summary of the primary arguments in support of Ms. Rasnow’s proposal, followed by a sampling of comments:

• Saves energy and money
• Beneficial to the environment
• People enjoy the freshness and smell of their clothes
• Gives clothes a longer life
• Good for people to get outside and enjoy the sun
• People would get some exercise by hanging the clothes

1. Using clothes line is a great idea. I love the look and feel of clothes dried on clothes lines.

2. I totally support no restrictions on clothes lines  . . . we should conserve every way we can.

3. We need to reduce our consumption of energy any way we can . . . considering our current energy problems, I say go for it! Items smell better air dried anyway.

4. I think it’s criminal to prohibit any reasonable energy-saving measure for aesthetic concerns. The fate of all living things on one side, the look of someone’s balcony on another. No contest. Bring on the clotheslines!

5. Whilst this is certainly a noble attempt at something positive, I am certain that legal firms (including yours) will no doubt enjoy the increase in billable hours fighting this issue on behalf of these myopic and uninformed boards.

LIMITED SUPPORT. Following is a sampling of comments by those who gave limited support to clotheslines:

1. I see nothing wrong with hanging clothes on a clothesline as long as the clothesline is not visible to neighbors such as in the garage or in an enclosed patio.

2. If the clotheslines were not visible from the common areas and walkways it might work.

3. I would vote yes for clothes lines in the back yard, as long as they are not visible from the front yards.

OPPOSED. The opposition to Ms. Rasnow’s proposal was quite strong. One owner sent photos. Readers made the following points:

• Clotheslines will not reduce energy consumption by 10%
• There are more effective means of saving the environment (hybrid cars, recycling, fluorescent lights)
• It will make associations look like slums, ghettos, low-income tenements, a third-world country, a refugee camp
• Do not want to look at their neighbors’ intimate clothing
• People can air-dry laundry inside their units and garages
• Resale value of homes will go down
• It will generate disputes and rules-enforcement problems
• It will create litigation
• There will be claims of theft
• There is not enough room in most condominium complexes

1. We are already in the unfortunate position of being in one war; is Ms. Rasnow trying to start another?

2. Good Grief, No!!!!!!!! We would look like the House of Horrors!!!!

3. That is the most stupid thing I have ever heard of, and I’m 85. Please ask her what she is smoking? Although I stopped many years ago I would love to try her brand.

4. Ms. Rasnow is hurtling us back to the dark ages. We can reduce our greenhouse gases by cooking under the sun and washing our clothes in the local creek but I think we’ve evolved beyond that too.

5. Eeek!! It would make our lovely residence into a ghetto-like place. No, no and no!!

6. What items would be acceptable….. bras, jock straps, crude designs on underpants, t-shirts with political statements, gang colors…..

7. Mandating clotheslines for community associations where there is seldom any place for them is one of the silliest, half-baked ideas I have heard in some time. What, for example, is the basis for the claim that this will save 10 percent of overall energy use?

8. The assumption that clotheslines will reduce utility consumption by 10% shows that the author lives in never-never land.

9. The net result of such a law would have a trivial reduction in power usage at the expense of people’s rights.

10. I’m sorry, but this idea makes very little sense. The 10% energy savings number appears bogus at best, and I sure would like to see the science behind it before I buy in.

11. The energy savings are de minimus and will hardly save the world from global warming, but it sure as hell will make us look like a third-world country in a hurry.

12. Condos weren’t designed for clotheslines.

13. There is enough problems and headaches trying to enforce the rules . . .

14. Next the managers will be the laundry police confirming that the clothes are taken in in a reasonable amount of time.

15. A blanket mandate for all communities seems a bit fanatic. . . . I’m all for conservation, but let’s not paint whiskers on an elephant and call it a kitty!

16. I don’t have a problem with people drying their clothes ‘naturally’. They are more than welcome to do so on “Drying Racks” INSIDE THEIR LIVING SPACE!!!

17. Clothes would be falling off balconies onto other balconies, onto streets. The community areas would look like 3rd world countries . . . and who would be responsible for missing laundry?

18. My suggestion is to sleep on one side of the bed for a week and then switch to the other. That way one would cut down 50% on the cost of laundering and the sheets will last longer.

19. Outlawing cars and trucks and mandating horse and buggies for transportation would save a lot more energy and be much kinder to the environment.

20. A better way to do it is to encourage energy efficient washers and dryers to be installed, installation of energy efficient lighting into all complexes (give the associations big tax benefits and bonuses if they do this . . .

21. She obviously does not live in a condo. This is fine for private yards but is an eyesore when hanging on decks. . . . This is not Italy and we shouldn’t be forced to look at drying laundry.

22. Perhaps we can all take our dirty laundry down to the swimming pool rather than using washing machines. We can also put tinfoil on our windows to cut down on the sun and heat, which will also save on energy and air conditioning.

23. This has to be in the “you’ve got to be kidding” category.

24. How ridiculous is that? People do need to be encouraged to reduce energy consumption in order to reduce greenhouse gases and global warming and they can do so by simply changing 5 regular light bulb with that of Compact Fluorescent Light Bulbs.

25. Here we go again with another person trying to implement items over what is not in the best interest of a development such as a condominium associations. . . . I wonder if Tina Rasnow would like to see my underwear hanging in her line of sight outside her front door and windows.

There is currently a proposal to override CC&R restrictions against clotheslines so that owners can hang their laundry out to dry. This would apply to condominium associations, planned developments, highrises, mixed-use developments, and every other form of community association in California.

The author of the resolution, Tina Rasnow, believes that “People need to be encouraged to reduce energy consumption in order to reduce greenhouse gases and global warming.” Ms. Rasnow describes clotheslines as “passive solar devices” and argues that clotheslines can reduce average household energy consumption in California by 10%.

Ms. Rasnow is coordinator of a self-help legal access center, which caters to people who can’t afford legal representation.

She argues that “Clotheslines are an easy way for people to reduce their non-renewable energy source consumption without investing a lot of money.”