Condo Law in California

HTML clipboard In an effort to minimize potential liability and calm homeowners’ concerns, the following report is submitted by the Association’s legal counsel.

Whereas, on or about the night prior to Christmas, there occurred at a certain condominium (hereinafter “Unit” with identifying numbers redacted for privacy purposes) a general lack of stirring by creatures therein, including, but not limited to a mouse (an issue under review with the Association’s pest control company). Socks had been affixed around the chimney in the hope that St. Nick aka Santa Claus (“Claus”) would arrive sometime thereafter. The Board asked our firm if the hanging of socks was a violation of the governing documents. After extensive review by one of our associate attorneys, it was determined that no violations occurred. The CC&Rs and Condo Plan identify the mantle as part of the Unit. As such, owners are allowed to decorate their mantles.

Occupancy Restrictions. The minor residents, i.e. children residing at the aforementioned Unit in conformance with the Association’s occupancy restrictions, (which allow no more than two residents per bedroom and one for the unit i.e., the 2 + 1 rule), were in their beds and engaged in dreams of candies, nuts and/or sugar plums (also not a violation of any Association rules). According to declarations submitted by the owners of the Unit, members in good standing, they too retired to their beds.

Security Incident. Suddenly, and without prior notice or warning, there occurred a disruption in the common areas. One of the aforementioned residents immediately rushed to a window to investigate the cause of the commotion. Whereupon was observed, with some degree of wonder and/or disbelief, an unregistered sleigh being pulled through the air by approximately eight (8) undocumented reindeer, having breached security by failing to stop at the guard station at the front gate. (The Board is reviewing possible changes to security procedures to avoid such incidents in the future.) The unlicensed driver of the nonconforming vehicle appeared to be the previously referenced Claus.

Co-Conspirators. Said Claus was giving direction to the reindeer and specifically identified the animal co-conspirators as: Dasher, Dancer, Prancer, Vixen, Comet, Cupid, Donder and Blitzen (hereinafter the “Deer”). Upon information and belief, it is further asserted that an additional co-conspirator named Rudolph may have been involved. The Association’s management company is checking its records to see if it has any contact information for Claus and his Deer.

Rules Infraction. According to members who witnessed the incident, the vehicle and Deer trespassed upon the common area roofs without Board permission and in clear violation of the Rules & Regulations. Because of possible insurance implications, the Association’s insurance broker was notified. The potentially unsafe vehicle was filled with what appeared to be items of unknown origin or nature. Suddenly, without prior invitation or permission, either express or implied, the vehicle arrived at the Unit, and Claus entered via the exclusive use chimney in further violation of rules requiring all guests use front doors only.

CC&R Violation. The aforementioned unauthorized guest was clad in a red suit and carried a large sack containing toys, together with other unknown items. Claus was smoking tobacco in a small pipe in clear violation of a recent CC&R amendment against smoking in Units. (The smoking ban is currently subject to legal challenge by a chain-smoking couple who believe they should have been grandfathered. The unbudgeted legal fees created by the litigation my result in an emergency special assessment after the first of the year. A copy of the complaint is available for review in the management office.)

Hardwood Floors. The boots worn by Claus also made excessive noise on the hardwood floors and woke the owners in the unit below–a matter scheduled for discussion at the next regularly scheduled board meeting to determine if acoustical standards should be raised for future hard surfaced floor installations. Members are invited to express their opinions on this important issue during the Open Forum portion of the meeting. The agenda for the meeting will be posted on bulletin boards at least four days prior to the meeting.

Nonprofit Status. Claus immediately filled the stockings of the aforementioned minor children with toys and other small gifts. (Out of an abundance of caution, we asked the Association’s CPA to determine if this jeopardizes the Association’s nonprofit status.) Upon completion of the task, Claus touched the side of his nose and flew up the chimney to the roof where the Deer waited as lookouts beside the overloaded sleigh. (The Maintenance committee will meet with the Association’s roofing contractor to examine the roof for potential damage. If any is found, the Unit owner visited by Claus may be specially assessed for the damage.)

Claus quickly departed for an unknown destination. However, prior to his departure Claus was heard to exclaim: “Merry Christmas to all and to all a good night!” Or words to that effect.

QUESTION: Regarding married couples on the board, would this also apply to a brother and his sister, living in two townhomes situated right next to each other? Our board has three directors. Consequently, two of those positions are held by this brother/sister team.

ANSWER: There is no conflict of interest if there is no shared ownership of their townhomes. Also, an argument can be made that siblings disagree more than they agree. If you want to prohibit relatives from serving on the board, you need to amend your governing documents.

RESTRICTING RELATIVES

QUESTION: Our association is having a problem with too many relatives on the board. They are telling everyone that its illegal to amend our bylaws to restrict relatives from serving at the same time.

ANSWER: It is not illegal. You can amend your documents to require that only owners may serve on the board and then restrict co-owners from serving at the same time. That should resolve the problem.

READER COMMENTS ON
BOARD FELONS

• On the subject of a convicted felon serving on the board, you failed to mention that the association’s D&O policy could be canceled (or a claim denied) if the board knowingly allowed a felon to serve. We had this occur at a property we manage (attorney accused of embezzlement in another state, served time, moved to California, wanted to serve on the board). An owner Googled his name and found out he was a convicted felon. The board contacted their insurance broker, who advised that their policy would be canceled if they allowed him to serve. -Kevin Wiley, Manager

• There is a problem on the Crime/Dishonesty policy for any HOA who has a convicted felon serve on their board if they were convicted of any theft. The employee dishonesty bond (which no doubt has been extended to bond the board members too) would not apply if this person stole from the HOA because of a standard bond exclusion that any prior theft would preclude coverage on a claim. The HOA should ask to see if a special endorsement could be granted to cover this person or should not allow them to serve on the board if any defalcation risk exists (and he would be treasurer) as all board members should be bonded which might even be a CC&Rs requirement. Dorothy McCorkindale, Wells Fargo of California Insurance Services

SPOUSE NOT ON TITLE

QUESTION: I am a newly appointed board member. Some people say I cannot be on the board since I am not on the deed; our condo is in my husband’s name. Others say that because California is a community property state, it is automatically assumed I am an owner.

ANSWER: Community property laws come into play in death and divorce, not director qualifications. Whether or not you qualify for the board depends on your bylaws. If your bylaws do not require that directors be owners, then a spouse not on title can serve on the board. If your governing documents require that directors be owners, then you need to be on a recorded deed to serve on the board.

READER DEFENDS SPOUSES
ON BOARDS

My husband and I both ran for the board last week because the previous board almost drove us into bankruptcy. I would respectfully suggest that you also talk about where it ISN’T a conflict of interest for a husband and wife to serve on the board. We both ran to help save our investment because the people running the board were, in our opinion incompetent to do so. The time that my husband has devoted to the board has meant time away from our family as he cleans up historical messes of which we were not apprised when we purchased our unit. So please go easy on this “conflict of interest” thing. Sometimes there is another side to the story, and you might not want to so readily advocate legislating couples off of the board. Maybe the community, who knows the couple, is capable of deciding based on their character. What do you think? I certainly had an overwhelming show of support. Terri H.

IGNORING NEW POOL
SAFETY LAW

I continue to receive e-mails and phone calls about the Virginia Graeme Baker Pool and Spa Safety Act, which requires all pools be equipped with anti-entrapment systems. Associations are being told not to worry about compliance because (i) inspectors do not have time to inspect HOA pools, (ii) the state is developing its own standards that will not be ready until mid-2009, or (iii) compliance can wait until pools are resurfaced, renovated, replumbed or drained (L.A. County advisory).

Needless to say, enforcement agencies are in disarray. Personally, I would not rely on anyone’s assurances that you can ignore or delay compliance with federal law. If someone were injured or died because your pool was not in compliance, you face criminal penalties (up to $1.8 million), imprisonment, and civil liability despite “official” assurances to the contrary. In addition, your association’s insurance may deny coverage if you knowingly ignored the law and continued operating your pools and spas.

RECOMMENDATION: Boards should have a licensed professional inspect their pools and spas to find out if they are in compliance with the new law. If the professional determines you are in compliance, get it in writing. If you are not in compliance, close the pool, pull permits and schedule the work. If you do not have enough money, levy an emergency special assessment. If a governmental agency tells you to hold off on the conversion, close your pool until the county/state gets its act together. If you are unsure, consult legal counsel.

QUESTION: We have two married couples who want to run for the board. Is there any Civil Code that addresses two persons from the same household (both on title) from running for the board. This would allow two households to control a five member board.

ANSWER: Married couples on the board create potential conflicts and can cause problems (but not always). You need to amend your bylaws to prevent this from happening. When we amend bylaws, we routinely add director qualifications, including restrictions on co-owners from serving together on boards.

CONTRACTORS
AT BOARD MEETINGS

QUESTION: Can I, as a director, invite our landscape contractor to a board meeting? I am concerned about the need to spend extra monies to plant a slope. The landscape chair and the president are refusing any access to the contractor’s expertise or to allowing us to ask related questions of him.

ANSWER: Even if you invited the contractor, he could not address the board unless the board approved. Also, it’s not fair to to put the contractor in the middle of a fight between board members. You can raise the issue in an open meeting and try to persuade your fellow directors to invite the contractor as part of their due diligence.

CONVICTED FELONS
ON BOARDS

QUESTION: A board member elected to our treasurer position is a twice convicted felon, one for burglary and one for criminal negligent homicide. The board claims this felon has paid his debt to society and therefore is trustworthy.

ANSWER: There is nothing in the law that prohibits convicted felons from serving on boards. The Corporations Code states, however, that boards may declare vacant the office of any director who has been convicted of a felony. Corp. Code §7221(a). Some associations include this restriction when they amend their bylaws.

RENTERS AT MEETINGS

QUESTION: Renters have always been welcome to our meetings. There’s never been a problem until the last meeting. A person who lives with an owner was kicked out of a meeting because he was causing trouble. This was fine, but management told us it is “illegal†to allow non-owners in our meetings.

ANSWER: Although only members have a “right” under the Open Meeting Act to attend board meetings, it is not “illegal†for renters to attend. Boards may allow non-members to attend if they wish. I provide more detail on my website under “Renters†.

MEETING TIMES

QUESTION: I have been looking at several HOAs and find that many have their board meeting at 10:00 in the morning when only a few of the retired homeowners can attend. Is this legal?

ANSWER: Yes, it’s legal. Meeting times are set by the board for the convenience of director schedules so they can attend to the association’s business.