Condo Law in California

Dear Readers,

I am pleased to announce a major upgrade to the Davis-Stirling website. Since it was first launched in January 2004, content on the website has grown to over 1,200 pages of information with thousands of internal links between forms, statutes, and case law. Traffic has also grown dramatically with 2 million hits per month on the site.

New Internal Structure. To accommodate the increasing usage, last year we committed $100,000 to an overhaul of the internal structure of the website. A team of developers upgraded our static HTML website to a state of the art ASP.NET 3.5 content management system, which dramatically increases the capabilities of Davis-Stirling.com.

More Power, More Speed. In addition to changing the programming language, powerful caching algorithms were added that deliver pages at lightning fast speeds.For more power we moved our website to Mosso, a website hosting service that provides advanced technology for high-traffic, high-performance websites. Instead of one server, we now have access to the computational power of hundreds of servers, and our bandwidth was expanded to 500 GB–the equivalent of expanding a two-lane dirt road to a ten-lane highway. This will allow the website to run smoothly during peak traffic hours.

New Features. We gave the website a sleeker design, while keeping the same general look and feel of the original website to make it easy for you to quickly find the information you need. Some of the new features include:

• An advanced search feature that allows you to search the “Main Index.” The search feature is now on the tab bar to give you ready access to it. In addition, we added a drop down menu that lets you separately search statutes and case law.
• A “browsing history” was added under the tab bar that allows you to track the pages you viewed, so you can easily return to them.
• More cases affecting community associations have been added to the site and re-indexed for ease of location.
• An e-mail sign-up has been added to the Job Market to speed contact between those posting jobs and those searching for them. It notifies participants whenever a new job is posted.
• The website now opens directly into the Main Index to speed your search for topics and sub-menus were restructured to make them easier to read.
• A “Dispute Resolution” section has been added to make it easier to find ADR and IDR requirements under the Davis-Stirling Act, and to obtain qualified mediators who know and understand the problems faced by homeowners associations.

Fine Tuning. I want to thank everyone for your kudos, ideas for improvements, and editing suggestions. I encourage your continued feedback, especially about any broken or misdirected links you might find, so we can fine tune the website.

More Features Pending. We have more features on the way and will announce them as they come online. In the meantime, please visit our new website and give us your feedback.

QUESTION: Our homeowners association has a few owners who are constantly suing the HOA. Even though we end up winning, it costs our association many dollars as well as hours of manager and staff time to fight these issues. Is there some way we can take the sue-happy owners to small claims court? If we had numerous complaints against them, it might deter their continuous lawsuits. I know of over 50 homeowners who would be excited to file in small claims against them.

ANSWER: A lot of associations share your frustration. A few disruptive, litigious owners can create a lot of turmoil. They also drain the association’s resources. I like the idea of giving them a taste of their own medicine and making them defend against 50 small claims actions, but you need a reasonable basis for 50 owners to file 50 actions. I’m not sure you have one.

MANAGER ON THE BOARD

QUESTION: The association I live in would like me to be on the board and manage the association. Can I do this?

ANSWER: The plan is fraught with peril. You should do one or the other but not both.

RECORDING MEETINGS

Dear Adrian, We own and operate our own TV station. All open meetings are video taped for multiple delayed broadcasts to any resident hooked to our cable system. This benefits those who cannot attend the monthly meetings. Now, some of our more technologically savvy members are talking about webcasting the meeting. As long as we adhere to the practice of calling the minutes the official record of the meeting and those minutes are not rife with errors (a board responsibility), I don’t see the value in worrying about tape and video recordings.  -Mel Standart

COMMENT: I fully support broadcasting open meetings and keeping those tapes on file. Doing so makes it much harder for rogue directors and unethical dissidents to misrepresent what was said at meetings. Moreover, broadcasting the meeting may moderate the behavior of bullies, whether owners or directors, since their actions would be on display for all to see. My objection is to individual owner recordings being made of the meeting. That recording can then be altered or portions taken out of context and put on the internet. Without a master recording to expose the tampering, refuting the distortion becomes very difficult. -Adrian Adams

WIFE’S FREE SPEECH RIGHTS

Regarding your response to the wife’s free speech, her actions or communications may touch upon tort law. She should be advised (1) if the [board member] husband has communicated to her any board trade secrets or confidences, she may not be free to communicate them without liability to her and/or her husband; (2) If she has acquired the information through theft or snooping into her husband’s confidential documents, that will also be a problem, for her and/or her husband (he may be liable for failing to secure the confidences, etc.); (3) although she may have some fair comment, she needs to be careful not to defame the board of directors and/or the management company, or disparage the management companies’ goods, products, or services. My own experiences dealing with condominium owners is that they tend to, perhaps understandably, become over-zealous when dealing with issues impacting their own property. -J. Drudi

QUESTION: My husband is a board member. I want to do a mailing and posting on a website expressing my concerns about board and property management actions, non-actions, unethical behavior, secrecy, and lack of fiduciary duty (my husband is not a part of the behavior). I also want to circulate a petition to bid out the property manager. Can I do this if my husband is a board member?

ANSWER: You do not give up your free speech rights when your husband goes on the board, so you can mail letters, make phone calls, and post information on websites until your heart’s content. However, your actions may significantly impact your husband’s ability to work with fellow directors. A little discretion may go a long way. Also, a membership petition seeking bids from other management companies is not binding on the board. Direct democracy is quite limited.

CUMULATIVE VOTING

QUESTION: A few years ago, we amended the bylaws & CC&Rs to eliminate cumulative voting to stop people from soliciting proxies and abusing the voting/election process. This year the current board decided to allow cumulative voting even though the bylaws prohibit it. Is that legal?

ANSWER: If cumulative voting is not provided for in your association’s governing documents, it cannot be used. Corp. Code §7615(a). If the board wants to use cumulative voting, the bylaws must be amended to provide for it.

MEETING TAPES

QUESTION: Regarding the taping of a board meeting by the secretary, prior to the approval of the meeting minutes and then the destruction of the tape, does a director have the right to hear the tape of the meeting in which he participated?

ANSWER: Normally, taping by the secretary is solely for his/her use in the preparation of minutes and, in my opinion, should be erased once the draft minutes have been prepared for the board’s review.

Some boards have the unfortunate experience of suffering the ranting of a rogue director who is constantly disrupting meetings, intimidating fellow directors, and threatening litigation. His/her bullying and threats will inhibit free and open discussion by directors if they fear (i) the recordings may be used in an alleged defamation action or (ii) snippets of the recordings will end up on the internet. For that reason, boards can and should adopt a policy requiring that tapes be erased once the minutes have been prepared. Accordingly, the board can deny the director’s request to listen to tapes before they are erased. For more information, see Recording Board Meetings.

CONDOMINIUM RIDERS

Hi Adrian: [Regarding delinquent owners] I’d like to point out that it is possible for banks to pay association assessments if they wanted to. Each mortgage lender attaches a Condominium Rider or Planned Unit Development Rider to each mortgage that is written. Paragraph F of each rider states:

F. Remedies. If the borrower does not pay condominium [PUD] dues and assessments when due, then the Lender may pay them. Any amounts disbursed by Lender under this paragraph F shall become additional debt of Borrower secured by the Security Instrument. Unless Borrower and Lender agree to other terms of payment, these amounts shall bear interest from date of disbursement at the Note rate and shall be payable, with interest, upon notice from Lender to Borrower requesting payment.

Although the word “may” is used above, making it discretionary on the part of the Lender, the Lender can call this paragraph into effect. The Lender can pay the assessments, add it to the principal of the mortgage plus the interest rate of the Note. Mostly likely the banks will never do this if the mortgage is in arrears as it increases their loan. Then if they have to foreclose they have to ask for more money. However, in cases where the Borrower is not delinquent in the mortgage payment, but delinquent in the assessments, this is a possibility. -Sam Dolnick