Condo Law in California

QUESTION: We have a small group of owners that are still making noise about an election that occurred in our association 16 years ago. Since the limit to challenge an election is nine months and the association is only required to keep ballots for one year, is it advisable to destroy the ballots after one year as long as there are no legal challenges pending? It seems to be a good idea so that nobody can come back 10 years later looking for “hanging chads.”

ANSWER: The statute is a bit contradictory on the time limit for challenging an election. The election provision of the Davis-Stirling Act references the nine-month limitation provided for in the Corporations Code but also sets its own limit at twelve months. In either event you are well beyond the statute of limitations for an election challenge. Provided there are no pending legal challenges, you can dispose of the ballots. You should also adopt a written records retention policy in consultation with your CPA and legal counsel.

POSTING MINUTES ON
THE WEBSITE

QUESTION: My association used to post meeting minutes on our website. They stopped posting them and now require us to pick up copies at the office. Is there a reason why our minutes can’t be posted on our website? We have over 700 members.

ANSWER: There is nothing in the law requiring boards to post minutes on a website. All that is required is that they be made available within 30 days. Civil Code §1363.05(d). Even so, if associations have their own websites, they should post their minutes (except for executive sessions). This keeps the membership informed without any expense to the association or the members. Although not required, I prefer that minutes be posted in a password protected area of the website. If the association does not have a website, minutes or summaries of the minutes should be distributed to owners in the association’s newsletter or included monthly in owners’ billing statements.

UNLEASHED DOGS

QUESTION: Our CC&Rs require that dogs be placed on a leash. A few owners allow their dogs to run unleashed in the common areas. The dog people have petitioned the board to interpret “leash” to mean voice command or an “e-leash or collar”. This issue is taking a lot of board time and has created a division between owners in the community.

ANSWER: I doubt that voice commands and electronic leashes were contemplated when the leash restriction was originally enacted. The board has a duty to either reasonably enforce the existing CC&Rs or properly amend them. If the CC&Rs are not enforced and someone is injured by a loose dog, the association (and the board) would likely be sued. It might be that voice commands and electronic leashes are effective alternatives to traditional leashes. However, this is a matter that should be debated and voted on by the membership. If the leash requirement is in the Rules rather than the CC&Rs, the board should send a proposed rule change to the membership and allow at least 30 days of feedback before changing the rule.

PROSTITUTION AND
ILLEGAL PARKING

QUESTION: I have an owner that passed away earlier this year. He had a tenant that lived with him who is still residing in the unit. This particular tenant has been dealing drugs, engaging in prostitution, and having her guests park in fire lanes. Does the association have any legal right to evict the tenant?

ANSWER: Illegal parking? That’s usually the last straw. Unfortunately, if the association does not own the unit, it cannot evict the tenant. However, if it has sufficient evidence of illegal activities, it can contact law enforcement and it can make a demand on the estate to evict the tenant.

SPENDING RESERVE MONEY

QUESTION: Our neighborhood needs to have all of the streets repaired. The bids for the work are about $50,000.  Does the board have the authority to vote on this capital expense? Some members insist the homeowners must vote on this large expenditure. They argue that some members may want to make other repairs first.

ANSWER: The board has the authority to make reserve spending decisions without a vote of the membership. Moreover, as provided for in Lamden v. La Jolla Shores (1999), boards can decide the timing, method and extent of repairs

EXECUTIVE SESSION
WITHOUT A LAWYER

QUESTION: Can a board go into executive session to discuss legal matters without having an attorney present or available by phone?

ANSWER: Yes.

QUESTION: A fellow director submitted a letter of resignation to the board by email, effective immediately, which he attempted to withdraw several weeks later. Our bylaws say a director may resign upon giving written notice to the board. Does an email meet the requirement of written notice?

ANSWER: Yes, an email satisfies the written notice requirement. As provided for in California’s Uniform Electronic Transactions Act, an electronic document such as an email is an enforceable writing between parties. Emails are just as legal and enforceable as traditional letters signed in ink. Under the Act, a “digital signature” is defined as an electronic identifier, created by computer, intended by the party to have the same force and effect as a manual signature. Accordingly, the director’s email resignation is effective and cannot be withdrawn unless the board accepts the retraction.

AUTOMATIC PROXIES?

QUESTION: My HOA recently sent out secret ballots but took the position that members who returned ballots were assigning a proxy to the board for any votes taken at the annual meeting. I take exception to this action. I think a separate proxy signed by the homeowner should be at the owner’s request.

ANSWER: Clearly, ballots are not proxies but it’s possible your association used proxy language on the outside of the ballot envelope. Many law firms and management companies advocated this when the election law went into effect in 2006 because the legislature failed to indicate whether ballots counted toward quorum. The problem was subsequently resolved with clean-up legislation which counted ballots toward quorum. Civil Code §1363.03(b). As a result, proxy language is no longer needed and should be removed from envelopes.

BOARD ORIENTATION

QUESTION: A new board was elected on a platform of integrity and transparency. Their first action was to hold an unnoticed meeting with a majority of the board in attendance. They justified the meeting by stating that it was a board orientation and no business was conducted. Isn’t this a special meeting that meets the notice requirement?

ANSWER: I agree with the board on this one. I’ve conducted many board orientations over the years and they are extremely effective in bringing new boards up to speed on their duties as directors. I wish more associations held them. A meeting with management and the association’s attorney (i) to discuss the board’s duties, (ii) to discuss legal issues, and (iii) to receive historical background information does not violate the Open Meeting Act. The Act defines a meeting as “any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board, except those matter that may be discussed in executive session.” Civil Code 1363.05. Accordingly, board orientations do not meet the definition of a meeting and no notice is required.

5% SPECIAL ASSESSMENT

QUESTION: The Code limits board approved special assessments to 5% of the budget’s gross operating expenses. Does that include operating expenses before the reserve allocation or does it include the reserve allotment?

ANSWER: The Davis-Stirling Act uses the term “budgeted gross expenses,” which means all expenses in an association’s budget, both operational expenses and reserve contributions. The statute could have have said “budgeted operating expenses” which would exclude reserves but it did not. Civil Code §1366(b). Therefore, reserve allocations are included in the 5% calculation.

PRESIDENT WITH
WINDOW EXPERTISE

QUESTION: Our board recently published new specifications for replacing windows in our complex. The president of the board was primary in creating those specs. Coincidentally, he works at a company that sells and installs windows; that is his job. There has been no requirement that we use his company; however, some think that this is a conflict of interest. Do you think this should be allowed?

ANSWER: If the association is not using his company, there is no conflict. You are lucky to be getting the benefit of his expertise.

QUESTION: We have several owners in arrears on their dues and we cannot lien them because there are no board meetings for the next few months since directors are out of town. In the temporary absence of other remedies, is it lawful to report these owners to the credit monitoring agencies? The threat of their credit being harmed might give some impetus to them to pay what is owed.

ANSWER: There are two reasons why you should not report delinquent owners to the credit bureaus. First, since the directors are out of town and there are no scheduled board meetings, you do not have the board’s authority to take any action. Second, credit bureaus will not accept your reports of delinquent assessments since they only collect data from select sources with which the bureaus have a relationship (e.g., creditors, lenders, debt collection agencies and public records). Once the board votes to record an assessment lien the lien becomes a public record and will show up in credit reports.

BLIND DIRECTOR

QUESTION: One of our HOA clients has a homeowner who may be interested in running for the board. However, she is blind. Does the association have any legal obligation to provide her with board packets that she will be able to utilize electronic software?

ANSWER: There are enough statutes and case law protecting the disabled that the only sensible course of action is for the association to reasonably accommodate her blindness. In this case, you can simply scan her board packet into a PDF format and email it to her prior to meetings so her computer can read the documents to her (a feature of Adobe Acrobat). This will enable your blind director to prepare for and participate in meetings.

VIBRATING BED

Feedback #1. “Nuisance” complaints are clearly on the rise. My observation is that, in general, people are suffering from stress and anxiety and are hyper-sensitive to disturbances that are just a part of urban community living and would otherwise go unnoticed. Boards are needlessly insinuated into neighbor disputes incurring costs for all members, including the complainer. Boards are not your mother mediating a sibling fight. You are not the center of the universe. Not all life’s “disturbances” require litigation that clogs our courts. -S.Y.

Feedback #2. I have been an HOA manager for going on 30 years and we have all seen the fact that many laws put more and more of the burden upon the Board, shifting from the individual owner. While your comments say the board “may” become involved and “may” make a determination, I believe in this case the emphasis should be upon the unit owner to take action to enforce the CC&Rs. To ask a board to come to the unit at night and listen to a vibrating bed, I do not believe is reasonable. -S.F

RESPONSE: I agree that too many burdens are being placed on boards. However, if I owned a unit and a neighbor made it impossible for me to sleep at night, I would be demanding that something be done. The board can send a representative to listen on the board’s behalf and a test can be arranged during the day. If the board determines the complainer is being hyper-sensitive, no further action is needed. If the complaint is legitimate, the board should do something to stop the nuisance. -Adrian Adams

QUORUM

QUESTION: If an association amends the bylaws so that no quorum is required for an annual meeting, does the Corporations Code requirement of a majority kick in? I have had differing opinions on this.

ANSWER: I don’t see any conflict between the Davis-Stirling Act and and Corporations Code §7512 on this issue. The Corporations Code applies if your bylaws are silent as to quorum. If you amend your documents to eliminate quorum for the election of directors, they are no longer silent on the issue and you satisfy both the Act and the Code.

COMMITTEE AGENDAS

QUESTION: Can the board of directors or a single board member remove items from a committee’s agenda?

ANSWER: The objectives of the committee are set by the board but committee agendas are set by the committee chair. Boards should not micromanage their committees nor should individual directors interfere with the committee’s work. If the board is unhappy with how a committee is being chaired, it can appoint someone else to head the committee.