Condo Law in California

Boards should be aware that allowing owners to tile or carpet their balconies will cause water damage to the balcony, their unit, and the unit below.

Damage to Membrane. Tile and the grout used to install tile are porous; so is carpet. As a result, water will become trapped between these materials and the waterproofing membrane underneath. This will void the manufacturer’s warranty of the waterproofing membrane on the deck and will accelerate the breakdown of the waterproofing materials. The resultant seepage of water into the balcony structure will lead to wood rot and will also attract termites. Frequently, this is undetectable. Sometimes, the first sign of trouble is when the owner walks onto the deck and his/her foot goes through the flooring material. The structural repairs that follow are quite costly.

Water Drainage. Another problem caused by tile is that it reduces the amount of space between the top of the deck surface and the threshold of the sliding glass door. That means a heavy rain that overwhelms balcony drains will quickly spill over the threshold into the owner’s unit and the unit below.

Protection. Associations should amend their CC&Rs to clearly define maintenance responsibilities for balconies and decks. In addition, they should include maintenance guidelines in the rules. Finally, architectural guidelines need to be adopted prohibiting the installation of tile, carpet and other materials over the top of waterproofing membranes unless the owner is willing to sign and record a covenant taking responsibility for maintenance and damage, and indemnifying the association.

NO 10-YEAR WARRANTY
FOR DEFECTS

QUESTION: Our building is nearly 10 years old. A previous board president said the builder had given our association a 10-year warranty on common area defects. What is the board’s responsibility to perform due diligence on defects?

ANSWER: Although many believe that a 10-year builder warranty exists, there is no such thing. There is, however, a 10-year statute of repose. That means your association has a maximum of 10 years, unless the statute is tolled, to make claims against the builder for latent construction defects. Code Civ. Proc. §337.15. More importantly, there are other shorter statutes running at the same time that will extinguish an association’s rights. Boards should immediately contact an attorney if their property is less than 10 years old and they suspect defects. If they wait, they may lose the right to seek damages against the developer.

Duty to Investigate. Directors have a fiduciary duty to act in the best interest of the association and with such reasonable inquiry as an ordinary prudent person would, in a like position, would use under similar circumstances. Therefore, if a board knows or suspects they have defects they have a duty to investigate.

Picking an Expert. In performing their duties, directors are entitled to rely on information and opinions from experts. Investigations can be performed by construction defect law firms using a forensic architect or general contractor. I prefer that it be done under the direction of a law firm so it will have the attorney-client privilege attach as an added protection for the association. Most construction defect law firms will perform this initial evaluation at no cost to the association.

QUESTION: Does your article on day care centers apply to 55+ communities?

ANSWER: Good question! I reviewed applicable statutes and case law and found nothing that addressed this issue. The legislature may not have intended for children’s day care homes in age-restricted senior developments. Nonetheless, that appears to be the consequence of the legislation.

Under the day care statute, associations cannot prohibit or restrict homeowners (or tenants) from operating a family day care home for 14 or fewer children for periods of less than 24 hours per day. Health & Safety Code §1597.40(c) and §1596.78(a).

That leaves CC&R age restrictions. Age restrictions normally apply to people who reside in the community, not visitors. Children in day care homes visit for less than 24 hours at a time. As a result, it appears that day care centers can operate in senior communities.

**If anyone is aware of any case law on this issue we invite your feedback.

SOBER LIVING vs.
TREATMENT FACILITIES

QUESTION: You said we cannot prohibit sober living homes, what about alcohol and drug treatment facilities?

ANSWER: As previously discussed, associations cannot prohibit sober living homes that provide non-medical services to six or fewer persons who are working to overcome their addiction to alcohol and drugs. Sober Living Fact Sheet. The same is true for licensed non-medical alcohol and drug treatment facilities–homes that provide one or more of the following services: detoxification; educational sessions; and recovery or treatment planning. Licensing Fact Sheet

Thanks to attorney David Feingold of Ragghianti Freitas LLP for the links to the brochures.

GROUP CARE HOMES

QUESTION: There is a company that buys houses in our community and immediately turns them into board and care homes for seniors. We already have five of these homes. With falling prices on homes, we anticipate more will be converted. Any rule on this?

ANSWER: As with day care homes for children, associations cannot prohibit residential care facilities which service six or fewer persons. H&S §1566.5. A residential facility means any family home or group care facility providing 24-hour non-medical care to persons in need. Health & Safety Code §1502(a)(1). These facilities are specifically defined as residential use of property by a single family. H&S Code §1566.5. This effectively goes around an association’s private restrictions.

HARD TIME BELIEVING

QUESTION: I have a hard time believing that our homes can be day care centers with all those cars and people coming and going and play areas near our homes. We own our homes and land. We pay for the upkeep on our roads and dues for the clubhouse and pool. I have a hard time believing that day-care center with up to six clients can operate in our association.

ANSWER: There is a saying attributed to Mark Twain (and others) that bears repeating: “no man’s life, liberty or property are safe while the legislature is in session.”

RESTRICTING RENTERS

QUESTION: Do HOAs have the legal right to limit the number of rentals within their HOA, i.e., 10%?

ANSWER: Yes, associations have the right to impose reasonable rent restrictions. However, there is a bill pending in Sacramento which, if passed into law, would prohibit associations from imposing rent restrictions on units if those restrictions did not exist when the unit was last purchased. You can see the amended bill as it stands now.

SOLAR ENERGY

On June 30, 2008, Governor Schwarzenegger signed Assembly Bill 1892, which prohibits homeowner associations from barring the installation of solar energy and solar water heating systems. Although the Civil Code currently voids CC&R restrictions on the installation of solar energy systems, it did not include an association’s operating rules. The new law corrects this ambiguity.

SOBER LIVING FACILITIES

QUESTION: I appreciated reading your article on day care centers. A growing phenomenon in our community and others nearby is for operators to purchase homes to use as “sober living” facilities for individuals recovering from alcohol or drug issues. Can associations prohibit them?

ANSWER: Similar to day care homes for children, associations may not prohibit owners or tenants from operating an alcoholism or drug abuse recovery or treatment facility which serves six or fewer persons. Health & Safety §11834.23.

DAY CARE CENTERS AND
RECREATIONAL FACILITIES

QUESTION: Can the day care provider use the pool area and other amenities for the children under her care? One tenant operates a home day care and brings 4 to 5 kids to the pool area. The CC&Rs restrict the number of guests to 2.

ANSWER: Like other homeowners, operators of day care homes (owners and tenants) must comply with the association’s rules and regulations. Thus, if the association restricts the number of guests each homeowner may have in the pool area, day care operators must adhere to this rule or be subject to disciplinary actions.

DAY CARE INSURANCE

QUESTION: Can the association purchase insurance in the name of the day care center to cover itself if the center does not carry any insurance?

ANSWER: Yes, an association can purchase liability insurance for the day care center. However, the association’s best option is to have the day care home purchase its own liability insurance for the following two reasons: (1) The association’s general liability insurance policy already protects the association against claims of bodily injury and property damage. If a claim is made against the association, its insurance carrier would defend the association and its officers and employees. Keep in mind, however, that the insurance carrier is not obligated to defend the day care home or its operator. (2) It may appear unfair and unreasonable to homeowners for the association to bear the burden of purchasing and paying for the day care home’s insurance policy.

*Thank you to insurance specialist Tim Cline for his input on this question. You can find his contact information in the Service Directory.

TUTORING BUSINESS

QUESTION: What about a tutoring business? Does this come under the same umbrella as day care centers?

ANSWER: No, a tutoring business is not afforded the same protection as a day care home for children. If your CC&Rs call for “residential use only,” the association may prohibit tutoring businesses.

RESTRICTING SMOKING

A new resource on smoking in common interest developments has been released by the Technical Assistance Legal Center, a project of Public Health Law & Policy and the Public Health Institute. The brochure is titled “How to Make a Condo Complex Smokefree.” It is the best I’ve seen on the subject. It is well-written and should answer a lot of your questions about how to restrict smoking in your association.

QUESTION: Our CC&Rs ban any commercial use of property but one of our residents is running a day care business out of her condominium. We sent her a letter demanding she cease and she responded that under California law we cannot stop her from running this business. Is this true?

ANSWER: Yes. Under California law, associations cannot prohibit or restrict homeowners (or tenants) from operating a “family day care home for children.†Health & Safety Code §1597.40(c). A family day care home means a home that regularly provides care, protection, and supervision for 14 or fewer children for periods of less than 24 hours per day.†H&S §1597.78(a)

In enacting the above law, it was the intent of the Legislature that family day care homes for children be situated in normal residential surroundings so as to give children the same home environment as provided in a traditional home setting. H&S §1597.40(a)

Reasonable Regulations for Day Care Centers. Although associations cannot prohibit day care centers, they may adopt reasonable regulations that address the following issues:

1. License. The homeowner or tenant operator must obtain proper licensing. Different conditions and requirements are imposed by California law for small family and large family day care homes. H&S §§1597.44-46; 1597.465. Associations should check both the validity and type of license with the local Community Care Licensing Division Child Care Office.

2. Local & State Laws. Day care operators must comply with all local and state laws regulating the licensing and operations of a day care center. The “Manual of Policies and Procedures†sets forth the regulations and operating procedures of a licensed family day care home.

3. Insurance or Affidavits. Operators must maintain (1) liability insurance in the amount of at least $100,000 per occurrence and $300,000 aggregate, or a bond in the aggregate amount of $300,000; or (2) affidavits signed by each parent with a child enrolled in the center that states that the parent knows that the day care center does not carry insurance or a bond. If there is insurance or a bond, the association may require that it be named as an additional insured, provided that the association pays any additional premium assessed for this coverage. H&S §1597.531

4. Indemnification. Day care operators must indemnify, defend, and hold the association harmless for any liability arising out of the operation of the day care facility.

5. Supervise Children. Day care operators must supervise children when they are on the premises.

RECOMMENDATION: The association’s best option is for the day care facility to purchase liability insurance and to name the association as an additional insured (see #3 above). However, the facility is not legally required to purchase insurance if it maintains a file of signed affidavits.

Members have the right to review minutes but they don’t own the minutes nor do they have the right to remove them from the association’s office. Following is the recent experience of one association.

The Theft. An owner entered the management office to inspect minutes. When the receptionist left the room to make arrangements, the owner grabbed a binder of original, signed minutes and fled the building. The manager pursued the owner into the parking lot, calling his name. She caught up with him as he opened his car door. She demanded that he return the association’s property; otherwise, she would call the police.

The owner threw the binder into his car and then turned on the manager and began screaming at her. He came within inches of her face, raised his hands and put his finger in her face. Fearful of being struck, the manager backed away. At that point, the owner jumped into his car and sped away.

The Arrest. The Sheriff’s Department was notified. After investigating the incident, a Sheriff’s deputy arrested the owner and recovered the minutes. The District Attorney filed a criminal action against the owner but later dismissed the case.

The Lawsuit. The owner then sued the association, the manager, the deputy who arrested him, the District Attorney, and the County. He claimed that as a member of the association he could not be guilty of “stealing his own property.” [That's like claiming because you own stock in General Motors, you have an ownership interest in GM's records and can remove them from their corporate offices without GM's permission.] The association filed a motion to strike.

The Ruling. The court granted the association’s motion and ordered the owner to pay the association’s attorneys’ fees and costs. The court wrote that “while Plaintiff as an association member may have access to the minutes, he does not have the unfettered right to walk into [the] Association’s office and take possession of the binder containing the meeting minutes without permission.”

COMMENTS. The Davis-Stirling Act defines records as the “Association’s” records, not the members’ records. Civil Code §1365.2 Members may inspect the association’s records but with limitations. Moreover, because the records belong to the association, owners cannot use or sell the association’s records for commercial purposes, or for any other purpose not reasonably related to a member’s interest as a member. Civil Code §1365.2(e) If members believe their inspection rights have been violated, they can file suit in small claims court. Civil Code §1365.2(f)