Condo Law in California

QUESTION. My neighbor installed a message bed which sends noise and vibrations into my unit and keeps me awake at night. The association has not been very supportive as they do not feel it is a nuisance. Are there any requirements for the association to take action or do I need to take action directly with the unit owner?

ANSWER. If the noise from the bed is such that it constitutes a nuisance, both you and the association can take action against the owner for violation of the nuisance provision of your CC&Rs. In an unpublished opinion, the California Appellate Court ruled that an association acted reasonably when it required an owner to remove his hot tub because noise from the tub constituted a nuisance. Pacific Ranch Homeowners Association v. Murray (2008).

Objective Standard. To be a nuisance, the noise must be significant enough to unreasonably interfere with the quiet enjoyment of your property. If your CC&Rs provide an FIIC rating for sound transmission between units, an acoustical consultant can test the noise levels. If they fall below those set in your CC&Rs, the matter is closed. If the noise is above those levels, then there is an objective determination that your neighbor is creating a nuisance.

Subjective Standard. If your CC&Rs do not have an objective standard, your board can subjectively determine whether a nuisance exists. From your unit, the board can listen to the noise and vibration. If the board makes a good faith determination that it does not rise to the level of a nuisance, no further action is required by the board. If you disagree with the board’s decision, you still have the right to initiate legal action against your neighbor.

Corrective Action. If the board finds that the noise and vibration are excessive, it can require that the owner abate the nuisance. That might require putting the bed on rubber cushions and muffling the motor. If that is not successful, the board can require the owner to cease using the vibrating feature of the bed. If the owner refuses, the board can hold hearings and fine the owner every time she creates a nuisance. If the fines do not curb the nuisance, the board can initiate legal action against your neighbor. In addition, your board can specifically prohibit massage beds in the Rules & Regulations. To make the prohibition stronger, the membership can amend the CC&Rs to ban such beds.

NEW FHA REQUIREMENTS

QUESTION: Have you heard about new FHA requirements for HOAs effective 10/1 or 11/1 that no longer allow spot approvals–the entire association needs to go through the approval process in order for members to get FHA financing?

ANSWER: Sadly, this is correct. The effective date is 10/1. The major wigs of the National Association of Home Builders had a meeting with the new FHA Commissioner, David Stevens, to complain about this and other matters. I have not heard of any results yet. -Clifford Treese, CPCU, ARM, CIRMS, President of Association Information Services.

ANNUAL MEETING MINUTES

QUESTION: Our board secretary says that because our bylaws require us to use Robert’s Rules of Order, our annual meeting minutes are approved by the board of directors at the next board meeting. I say they are approved by the membership at the next annual meeting. Who is right?

ANSWER: You are both correct. The membership normally approves the minutes at the next annual meeting. However, as provided for in section 48 of Robert’s Rules of Order, minutes that do not come up for review within a quarterly time interval may be approved by the board of directors. The benefit of allowing the board to approve the minutes is that they will be posted within thirty days of the meeting, rather than a year later.

SIGNING CONTRACTS
WITHOUT APPROVAL

QUESTION: Can a board member sign a contract before the contact has been approved by the board?

ANSWER: No, individual directors do not have the authority to sign contracts without board approval. This also applies to managers. Signing agreements without approval can create liability for the association and the signing director/manager. If a vendor reasonably relies on the agreement, then a binding contract is created even though the board has not approved it. Corp. Code §7214. If the board terminates the unauthorized agreement, the association may face litigation and the payment of damages to the vendor.

Exceptions. Emergency repairs and nominal maintenance issues are an exception. If the president or manager needs to hire a plumber to stop a flood, and an emergency restoration company to clean up the water, they should have the authority to make such arrangements without getting bids, calling a board meeting, and deliberating on the merits of the various bids. The same is true for routine repairs that fall within a dollar limit set by the board. In other words, the board can authorize the president or manager to make expenditures up to $500 (or a $1,000 or $2,000, etc.) without prior board approval, provided the expenditures are within budget and the expenses are reported to the board. The expenditure limit is set by the board and is related to the size of the association’s budget.

QUESTION: Our bylaws state that if a board member misses 3 meetings in a row the director can be removed. Does that happen in open session or should it be in executive session for privacy reasons because it is a disciplinary action?

ANSWER: It should be done in open session. It’s not a disciplinary action—the board is not fining him for violating a rule; it’s declaring his seat vacant because he is no longer qualified to be a director.

PRESIDENT CONTROLS
NEWSLETTER?

QUESTION: Can the president of the board tell the treasurer that he cannot publish financial information to the homeowners by way of the newsletter?

ANSWER: If the board delegates control of the newsletter to the president, yes. Otherwise, it would be a board decision. In my opinion, boards need to keep the membership informed and should routinely publish financial information in the newsletter. If the treasurer is intentionally publishing inaccurate information because he/she has a political agenda, the board should remove the treasurer and appoint someone who will publish accurate data. If the information is accurate, the board should disclose, disclose, disclose.

RENTER ON THE BOARD

QUESTION: Can a renter run for the board? There is no prohibition in the governing documents against it.

ANSWER: Absent any membership requirement for directors in the governing documents, renters can serve on the board. To add qualifications, you need to amend your bylaws.

FANNIE MAE AND
MASTER INSURANCE POLICIES

QUESTION: Fannie Mae states that the following is no longer permitted in master insurance policies: (i) blanket policies that cover multiple unaffiliated condominium associations, and (ii) self-insurance arrangements whereby associations are self- insured or have banded together with other unaffiliated associations to insure all of the general and limited common elements of the various associations. What does Fannie Mae mean by affiliated vs unaffiliated?

ANSWER: Instead of affiliated v. unaffiliated, a more artful use of terminology might have been to use the term “insurable interest.” Associations insured in master (or group) insurance programs have no insurable interest with one another much less with the group. This lack of insurable interest is contrary to state statutes. There are other issues, however, that arise from such group programs such as the association not being the First Named Insured, not ever receiving an actual complete insurance policy and receiving insurance certificates which fail to mention that the First Named Insured is the group and not the association.

Thanks to Clifford Treese, CPCU, ARM, CIRMS for this answer. Cliff is a nationally recognized professional in insurance and risk management for common interest communities and President of Association Information Services.

CHRONIC COMPLAINER

QUESTION: We have an owner who is constantly emailing and calling our onsite manager and management company with complaints. She is constantly threatening to sue the HOA and our managers. She claims the board gave her cancer due to stress, which she later admitted was misdiagnosed. She left live cockroaches under glass on a board member’s front step. She tried to recall the board twice. She is taking up so much of our time and money the board can hardly focus on anything else. Is there anything that can be done?

ANSWER: I wish there were an easy answer but there isn’t. Chronic complainers and the mentally unstable make everyone around them miserable and burden the association with unnecessary management and legal expenses. Their misguided behavior adds to the stress already felt by directors who volunteer their time and energy to serve on the board. And they make it difficult to recruit others for the board. If their actions rise to the level of harassment and threats, the board can seek a restraining order.

PEER PRESSURE

FEEDBACK: [Re: Fining Everyone] If the fire department fines the association and the board levies a special assessment to pay it, the assessment would be against all homeowners and the peer pressure would be the same as the Marine Corps uses. -D.A.

RESPONSE: Instead of waiting for fines from the fire department and then assessing everyone, the board should consider installing a security camera to deter (or catch) the scofflaw. One reader suggested water boarding. I prefer security cameras since California is currently in a drought.

QUESTION: Someone has been propping open the fire doors in our condo building. When the fire department issued a warning to the HOA, the board posted a letter advising everyone that since they are unable to determine who is propping open the door, all residents on the floor would be fined. Is that allowed?

ANSWER: Your board is taking the same approach my drill instructor took in boot camp–if one person did something wrong, the entire platoon was doing push-ups until they dropped. This approach to discipline has its uses for creating military order and cohesion but homeowners are not Marines and associations are not boot camps. Your board cannot fine everyone on the floor, only the perpetrator, and only after due process.

ONLY ONE VOTE PER UNIT?

QUESTION: Our association only allows one vote per unit, even though there are two people on title. Doesn’t everyone have a right to vote?

ANSWER: One vote per unit (not per person) is normal and legal. Although every person on title has a right to cast that one vote, whoever casts the ballot is presumed to be voting for all his/her co-owners. Moreover, once received by the Inspector of Elections, the ballot is irrevocable. Civil Code §1363.03(f). Allowing every person on title to cast a ballot means a partnership of ten investors owning a single unit could disproportionately impact elections. If that same partnership owned two or three units, they could effectively control elections in smaller associations.

CENSURE

QUESTION: A board member chairs a committee to develop new rules for our HOA. This has been dragging on for over a year. The director is reluctant to meet with other committee members and hesitant to turn over an electronic version of the new rules. Can this board member be censured for interfering with HOA business? As part of the censure, can we disallow the director from making or seconding motions?

ANSWER: A censure is an expression of the board’s displeasure with the actions of a fellow director. So, yes, if the board cannot persuade your errant director to cooperate, he can be removed as chair of the Rules Committee and censured for interfering with board business. However, you cannot prevent the director from making or seconding motions. He continues to have all the rights of a director even though the board is unhappy with him.

CUMULATIVE VOTING
REQUIRED?

QUESTION: With the passing of legislation regarding cumulative voting, we are not sure on how it directly affects us. Our bylaws currently provide for cumulative voting.

ANSWER: Since your bylaws provide for cumulative voting, your association must use it for the election for directors. Civil Code §1363.03(b) To get rid of it, you must amend your  governing documents.

PETITION TO ELIMINATE
CUMULATIVE VOTING

QUESTION: A growing number of home owners in our association want to dispense with cumulative voting. How is this typically done? Do we need to present a petition to the board to amend our governing documents to remove it? Is the board bound to honor such a request?

ANSWER: Yes, you can present a petition signed by at least 5% of the membership to hold a special meeting for the purpose of voting on an amendment deleting cumulative voting from bylaws (better check your CC&Rs to see if there is a provision there as well). The board is obligated to set a date, appoint an Inspector of Elections, and mail out ballots. If the board is cooperative, the association’s attorney can draft the language for the amendment. If the board is not cooperative, you should include the amendment language in your petition so it will appear on the ballot.

LIMITS ON SPEECH

[Re: free speech bullies] Furthermore, the right of free speech should be balanced in a homeowners association setting with matters of nuisance, meeting disruptions etc., which are commonly a violation of the CC&Rs. Even in the public setting, free speech rights can be limited by time, place and manner such as when cities set limits on times of parades, and control riots, and limitations on signs that may be posted, etc. -Beth Grimm, Attorney

QUESTION: We have a homeowner who barbeques every Sunday and the smoke from the barbeque goes into his neighbor’s home. The smoke is so bad she has to close her windows and sometimes has to leave the house. She wants the board to intervene but the board believes this is an owner-to-owner issue since the barbeque is outside. Would the board have an obligation to intervene on her behalf?

ANSWER: The board has a duty to investigate and take appropriate action if it determines the smoke constitutes a nuisance under the nuisance provision of the CC&Rs. It does not matter that the nuisance originates outside.

Open Flame Devices. In addition, the barbeque grill may be a violation of California Fire Codes §308.3.1 and §308.3.1.1, which were adopted by the state in 2007 and by various cities and counties in 2008 and 2009. CFC §308.3.1 states that all open-flame cooking devices (including charcoal & propane grills) may not be operated on combustible balconies or within ten feet of a combustible construction. The two exceptions are for (i) single and two-family dwellings (duplexes), and (ii) buildings that have installed automatic sprinkler systems throughout, including balconies and decks.

LPG Containers. California Fire Code §308.3.1.1 further restricts the use of Liquefied Petroleum Gas (usually propane) grills by prohibiting containers with a capacity greater than 2.5 pounds. The only exception is for single and two-family dwellings. In addition, propane containers with a capacity larger than one pound cannot be transported through enclosed common area stairs, hallways, or elevators. They must be transported into the unit through an exterior stairway.

Insurance. Even if your city or county has not adopted these codes, your board should contact the association’s insurance broker to see if fire damage related to barbeques is insured. Some insurance carriers want to see barbeques (especially charcoal) gone from frame complexes altogether.

RECOMMENDATION. Boards should check with local fire codes, their insurance broker, and legal counsel and then draft appropriate restrictions on the use of barbeque grills and LPG containers.

NO SECONDS

QUESTION: If a director makes a motion, can he second his own motion?

ANSWER: No, the second must be from another director. (Robert’s Rules, 10th Edition, p. 34.) If the motion fails for lack of a second, there is no discussion and no vote on the failed motion.

5% SPECIAL ASSESSMENT

QUESTION: Is the special 5% assessment restricted to any particular use? Our CC&Rs say it is for capital improvement, but I find nothing in Davis-Stirling Act with that restriction.

ANSWER: There is no restriction in the Act related to how a special assessment is used, only on the size of the assessment. Civil Code §1366. If your governing documents limit how board approved non-emergency special assessments are spent, you may be bound by those restrictions. Your board should have the association’s attorney review the language in your governing documents and provide an opinion.

FREE SPEECH BULLIES

Feedback #1: It is amazing how the First Amendment has been perverted over the years. Does it not say “Congress shall make no laws . . .” That is, the unwashed masses have a right to speak out against their government (as distinguished from them not having the right to speak out against the monarch). The law does not apply to a private organization (e.g., club, business, or homeowner association). Also, let’s not forget manners, civility, and social graces that apply everywhere but are neither taught nor practiced anywhere these days. I’ll get off my soap box now. -Stephany Y.

Feedback #2: I find it amazing that so many American’s have such a misguided understanding of “Freedom of Speech.” Perhaps in bringing enforcement against these more often than not, bullies, they might view the board’s fining them and ejecting them from the meeting as our right to the pursuit of happiness! -Vicki M.

COMMENT. Free speech bullies seem oblivious to their own bad behavior, or worse, revel in it. Boards should always listen to membership concerns and be patient with members who get emotional. However, boards do not have to put up with abusive behavior, harassment, personal attacks, obscenities, and threats. There is no “First Amendment right” to such behavior and persons who engage in it can be ejected from meetings and, following due process, fined. If necessary, boards can seek restraining orders against them.

QUESTION: Can the same board member second himself if he was nominated as president of a 3-member board?

ANSWER: Yes. Nominations for each office (president, secretary and treasurer) are made by the directors. No second is needed for nominations. (Robert’s Rules, 10th Edition, p. 418.) In addition, directors may nominate themselves if they wish. Since the Davis-Stirling Act allows members to nominate themselves to run for the board, it would be reasonable to allow self-nomination as officers. Civil Code §1363.03(a)(3). Each nomination is then voted on by the board, not the membership.

TABLED ITEMS

QUESTION: If an item is tabled at a regular Board Meeting, can it be acted on in any way at the next meeting under old business?

ANSWER: Yes. The matter may be “taken from the table” by a majority vote of the directors at the next meeting. (Robert’s Rules, 10th Edition, p. 205.) If the board contemplates discussion and/or action on the tabled item, it must be listed on the agenda and posted at least four days in advance of the meeting.

FINED FOR HARASSMENT

Feedback: BULLSHIT — SO-CALLED “anti-harassment” resolutions violate both the statutory and constitutional rights of the homeowner. EVEN if the homeowner uses yelling and profanity, it is protected speech. -A.S.

RESPONSE: If you try that in a an open session of Congress, a city council meeting, or a court room, you will discover that your free speech rights are not unlimited. It is never appropriate to yell and use profanity in a board, committee, or membership meeting. You can be ejected from the meeting and fined for your disorderly conduct. (Robert’s Rules, 10th Edition, p. 627-629.)

CC&R AMENDMENTS
BY THE BOARD

QUESTION: Another board member says that the board can change our CC&Rs and bylaws without a vote of the members if there are changes in the Davis Stirling Act. I thought all amendments required a vote of the members. Can you clarify?

ANSWER: The Davis-Stirling Act empowers boards to remove discriminatory provisions. Civil Code §1352.5. If your governing documents authorize it, the board could also unilaterally amend the CC&Rs to make them comply with changes in the law. However, I don’t believe this issue has been tested in the courts so you should consult with counsel.

SOLAR PANEL LOAN

QUESTION: Regarding the question on solar heating of pools. I’ve always thought that the very act of installing solar heating would be a capital improvement. In that case a vote of the membership would be required. Exactly the same if a new (not replacement or repairs) spa or parking garage was to be constructed. Can a board just do that?

ANSWER: Unless the governing documents prohibit the board from making capital improvements, boards may add upgrades within budgetary constraints. Boards also have the authority to special assess on their own authority up to 5% of the budget for improvements.

UNCONTESTED ELECTIONS

QUESTION: You have an article under “uncontested elections” that has sparked a little disagreement in our offices. If the election rules or bylaws allow for nominations from the floor, and if write-ins are accepted, would you not be required to complete the balloting process?

ANSWER: Yes. If the election rules allow for write-ins and/or floor nominations, the association would be required to send ballots and conduct a full election since the election could be contested. You won’t know until you go through the expense of sending out ballots and hiring an Inspector to open and count the ballots. To avoid this expense, you need to amend your documents to eliminate write-ins and floor nominations.

POLITICAL PROCESS

Feedback. You frequently suggest if homeowners are unhappy with board decisions they should just ”vote in new directors” . . . easy to say, very difficult to do in most cases. Too bad there aren’t other realistic alternatives. What you suggest is just a cop-out. -C.G.

RESPONSE. If you have any easy alternatives (legal ones), send them my way. I’m open to suggestion.