Sep 25

QUESTION: If the president is handling calls, issues, etc. without informing the board–is he acting unilaterally? How does this impact other board members?

ANSWER: Absent a management company, board presidents typically oversee day-to-day operations for their associations. That means handling calls, meeting vendors and authorizing small expenditures. All of this is “unilateral” but within limits set by the board.

Limitations. When it comes to unilateral expenditures, boards can authorize their president to spend up to $100, $200, $500, etc. on HOA matters at the president’s discretion. The amount authorized varies from board to board and depends on the association’s budget. Once a limit has been established, expenditures by the president must be reported to fellow directors. Reporting can be done as costs are incurred and then noted in the board’s monthly financial report.

Duty to Monitor. Board members have a duty to monitor the president’s actions. If the president fails to abide by spending limits set by the board, fails to timely report matters affecting the association or exceeds other limitations set by the board, fellow directors can immediately appoint a new president.

CANCELED MEETING

QUESTION: The board canceled a scheduled board meeting. When a meeting is canceled, does the membership need to be notified?

ANSWER: By statute, no. The only requirement in the Davis-Stirling Act is to give notice of meetings. Nonetheless, common courtesy dictates that notice be given to the membership whenever a meeting has been canceled. Boards need to be respectful enough of their neighbor’s time to let them know.

Spelling. As an aside,the proper spelling of “canceled” in US English is with one L (as you correctly spelled it in your question). Words such as cancel and travel do not double the final L when using -er, -ed, and -ing. However, over the past 20 years I’ve noticed that the British spelling, which uses a second L, has crept into common usage. I see it most often when airline flights are “cancelled.”

NOTICE OF
CONTINUED MEETING

QUESTION: If a properly announced open meeting of an HOA board is continued to another date, does the “continued” meeting itself carry the same notification requirements as the original meeting, or may it be conducted without further notice?

ANSWER: You need to give notice of the continued meeting. Members must be given at least four days notice of the time and place of board meetings together with a meeting agenda. The only exception is for emergency meetings and executive sessions. Starting January 1, 2012 executive sessions will require at least two days prior notice to the membership.

FEEDBACK

Minute-Taking. In response to Bob W’s comment concerning a neutral person taking the minutes at meetings, I couldn’t agree more! Meeting minutes can be used in a court of law. Managers and board secretaries are not ideal candidates to take minutes because they are engaged in conversation and the decision making process. A neutral is not engaged in anything other than listening and writing. A professional meeting recorder understands what needs to be in the minutes and what does not. Just enough, but not too much. -Victoria C.

New Laws #1. The law is getting more and more restrictive in every way. I’m trying to refinance and the amount of information now required, even by the appraiser who also asks about rentals and management company, is almost bordering on the obsessively obtrusive. -Harriet K.

New Laws #2. While I typically support these types of laws I see two flaws: 1) it overburdens small HOAs with excessive costs to comply with law and 2) I see no form of civil penalties or ways of making boards liable for not complying with this new law. -David A.

New Laws #3. It’s obvious community associations are losing the lobbying “contest” with other special interest groups; e.g., Realtors. What are your suggestions for fixing this problem? -Wayne W.

RESPONSE: Associations need to contribute to CAI-CLAC (their voice in Sacramento) and write letters to legislators whenever there is a call by CLAC to lobby for or against a particular piece of legislation.

New Laws #4. The agenda law requires that all items be listed with sufficient details for owners to understand the questions to be debated and voted on. Does this apply to the executive session agenda as well? Are agenda items such as “Personnel Matters,” “Legal updates” and “Collection Log” adequate or too vague? -Denyse B.

RESPONSE: The Open Meeting Act does not address the level of detail required for agendas, whether open or executive. Because executive sessions are confidential (Civil Code §1363.05(b)) and topics covered are only generally noted in open meeting minutes (Civil Code §1363.05(c)), executive session items should not be described in detail in meeting agendas.

New Laws #5. Often we need some type of clarification prior to a decision as a board. We have discussed the issue in an open meeting and agreed that if the issue is clarified, we would approve it. It is then clarified and we confirm our votes by email so as not to stretch out the decision for another 30 days. Is there a method we can use to continue this practice under Senate Bill 563? -Dean H.

RESPONSE: Instead of tabling an item pending clarification of an issue, approve the item but make the approval conditional. If the clarification is “x” the action moves forward. If the clarification is “y” the matter is not approved and returns to the board at its next meeting for further discussion. If it cannot wait 30 days, schedule a special meeting with four days notice (unless a longer notice period is required by your governing documents).

New Laws #6. Some of the provisions are going to make it very difficult for our board of directors. They are all volunteers, they have jobs and they meet once a month. There are important timely items throughout the month they need to rule upon: collection matters, maintenance matters, personnel matters. Email votes are always verified at the next meeting and recorded in the minutes. In addition to making board and executive session meetings inordinately long, I think the new law will make it even more difficult to attract new board members. Is there any chance of revision before January 1, 2012? -Susan L.

RESPONSE: There is no chance at revision this year. The legislative session ended on September 9.

LA Times. The LA Times columnists who pontificate about HOAs and present such misleading information regarding the operation of HOAs are a thorn in everyone’s side. Their views are so inaccurate and counterproductive to creating harmony between owners, board members and managers. Surely there is some avenue for rebuttal? Why is the LA Times so resistant to permitting rebuttals to the content of the column? Any ideas as to how we can find an avenue to present truthful information? -Diana S.

RESPONSE: I received the following from a reader: “FYI … I work for the LA Times and have advised our Readers Rep of the comments about that article. She was on vacation but is now looking into it regarding a correction. Incidentally, errors can always be flagged by sending an e-mail to readersrep@latimes.com. We appreciate the feedback/input/help!”

-Adrian J. Adams, Esq

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Sep 18

QUESTION: My dad passed and left me a mobile in a 55+ park. He owned it and the lot for at least 15 years and recently died from a stroke. I’m 52 and the board won’t make an exception. I have nowhere else to live but there. Is there anything I could do?

ANSWER: There are federal and state laws against housing discrimination based on age. However, both carved out exceptions so seniors could form their own communities. “Housing for Older Persons Act of 1995” (HOPA) allows private communities to qualify as a senior community if it meets the following requirements:

  • at least 80% of all units are occupied by at least one person 55 years of age and older;
  • the association publishes and follows policies demonstrating an intent by the association to provide housing for persons 55 years of age or older; and
  • the association uses age verification procedures to ensure that occupancy percentages comply with the 55 and over requirement.

Even if less than 20% of the park is occupied by those under 55, the association can (and should) refuse to allow underage persons from moving into the park. They need a buffer to accommodate changes in the percentage when older residents die and leave underage spouses in their mobile homes.

RECOMMENDATION: A possible solution is to put a senior renter in your home for the next three years until you turn 55 and move in yourself. Another possibility is to get a senior roommate by renting out one of the bedrooms and moving into the other. Perhaps readers will have other suggestions.

NEW LAW RE
BOARD MEETINGS


Senate Bill 563 was signed into law on September 6. Following is a summary of the relevant provisions.

Notice of Executive Sessions. The bill requires that “Except for an emergency meeting, members shall be given notice of the time and place of a meeting that will be held solely in executive session at least two days prior to the meeting. Notice shall be given by posting the notice in a prominent place or places within the common area and by mail to any owner who had requested notification of board meetings by mail, at the address requested by the owner. Notice may also be given by mail, by delivery of the notice to each unit in the development, by newsletter or similar means of communication, or, with the consent of the member, by electronic means. The notice shall contain the agenda for the meeting.”

Board Decisions Via Email. Except for emergencies, boards are no longer allowed to make decisions by email. Emergency meetings may be held by email if all members of the board, individually or collectively, consent in writing to the action, and if the written consent or consents are filed with the minutes of the meeting of the board.

Teleconference Meetings. SB 563 also defines a “teleconference” meeting to be one in which a majority of the members of the board, in different locations, are connected by electronic means, through audio or video or both. The bill requires that a teleconference meeting (other than executive sessions) be conducted in a manner that protects the rights of members of the association. It requires that notice of the teleconference meeting identify at least one physical location so that members of the association may attend and at least one member of the board of directors be present at that location. All board members and homeowners must be able to hear one another.

NOTE: I will provide more detail and include links once I post the revised statutes on the Davis-Stirling.com website. SB 563 takes effect January 1, 2012.

NEW LAW RE
ESCROW DOCUMENTS

Existing law requires associations to provide specified documents upon request by escrow officers when a unit is sold. The statute failed to include minutes in its list of documents. Assembly Bill 771 corrects that oversight.

Minutes. AB 771 bill requires that sellers also provide “If requested by the prospective purchaser, a copy of the minutes of the meetings, excluding meetings held in executive session, of the association’s board of directors, conducted over the previous 12 months, that were approved by the association’s board of directors.”

Fees for Records. The bill also requires an association to provide an estimate of the fees that will be assessed to provide the documents. It allows associations to collect a reasonable fee based on their actual costs but prohibits charging additional fees for electronic delivery of documents. Delivery of the documents may not be withheld for any reason nor subject to any condition except the payment of the fee. Associations are allowed to contract with any person or entity to provide the documents on behalf of the association.

NOTE: AB 771 takes effect January 1, 2012 and includes a revised form for billing disclosures, all of which will be posted on the Davis-Stirling.com website.

FEEDBACK

LA Times #1. Thank you for your thoughtful response to whether managers should attend board meetings and take minutes. Sorry to say, the Los Angeles Times places little value on providing balanced information. The writers of the column have a clear bias against boards, attorneys and managers. If they could, they would abolish all HOAs. Why would you abolish a form of ownership that has made affordable housing possible to millions of people? I think it’s important to make it very clear that these people give bad advice and boards should not rely on their column for any guidance. -Judy C.

LA Times #2. Thank you for your rebuttal to the L.A. Times article!!! -Jan H.

LA Times #3. It is clear that the author has a bias against management companies. The manager’s job is to provide advice to the board that keeps them on the straight and narrow. Can the board assign some of its duties to its manager? You bet! Should it? This is a matter of contract, but in most cases it is a resounding “yes.” It has been my experience that the larger the association, the more complex it becomes, and with this comes the need for a manager with greater and more diverse skill sets. -Jim S.

LA Times #4. Managers at meetings???? Of course. We pay them to help manage and advise us even though all final decisions come from the BOD. They advise us when we might need an attorney’s advice and many other issues a board member might not be privy to. Come on guys wake up and smell the roses! -Gloria F.


LA Times #5
. Regarding “Managers at Meetings” I agree that “yes” we do need the community manager at the meeting. I agree with the LA Times, though, that the manager should not be taking the minutes. That might be okay in a small association which doesn’t want to hire a minute taker but in a larger association like mine we want an objective recording of what happened at the meeting. -Bob W.

-Adrian J. Adams, Esq

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Sep 11

QUESTION: I have a question regarding votes in a board election. One of the candidates received x number of votes. After the votes were tallied this person wanted to transfer the votes he received to another candidate. I told him I didn’t think that was allowed.

ANSWER: You are correct, he cannot transfer his votes. Once ballots have been cast, they are irrevocable.  Civil Code §1363.03(f). Once the votes have been tallied, the election is officially over and the results announced. Civil Code §1363.03(g). Changing votes after the election is over is something a banana republic would do. I know some may disagree, but we have higher standards for HOA elections.

Proxies. There is nothing in the law that allows a candidate to take votes cast for him and transfer them to another candidate. The only device that comes close is a proxy. Members can give a candidate an undirected proxy with the power to cast the member’s votes in any fashion he deems proper. Even so, once the proxyholder has cast those votes, they are irrevocable. Unfortunately, proxies lend themselves to fraudulent voting, which is why I recommend eliminating proxies (along with cumulative voting) from elections.

RENT RESTRICTIONS
IN THE RULES


Rent Restrictions. We adopted a 1-year minimum lease restriction in our Rules & Regulations. Will this be grandfathered by SB 150 since the rule is in our governing documents?

RESPONSE: Yes, I believe they will be grandfathered. Rules are part of an association’s governing documents. Civil Code §1351(j). Unfortunately, rules are not as strong as CC&Rs, but at this point they are better than nothing (provided they are not in conflict with your CC&Rs). Since time is running out, boards should contact their association’s legal counsel for appropriate rental restriction language.

MANAGERS AT MEETINGS

QUESTION: The September 4, 20011 Los Angeles Times said that “Management employees, like any other vendor, do not belong at association board meetings. Although they may be invited to attend, they should not be taking minutes or offering suggestions on the conduct or content of the meetings.” Is that true?

ANSWER: No it’s not true. But what should you expect, it’s the L.A. Times. I noticed that the paragraph did not cite any statutes or cases to support the writer’s position–that’s because there are none. Board members are volunteers and need to rely on vendors such as managers, lawyers and CPAs to assist them in carrying out their duties. Even paid professional directors on the boards of publicly traded corporations rely on managers, lawyers and CPAs to assist them in carrying out their duties, all of whom attend meetings at the board’s invitation.

Increasing Burden. With the increasing burden put on HOA boards by the legislature and the courts, it is no longer possible for directors to fulfill their duties without professional assistance. The law specifically authorizes boards to delegate duties such as management, preparation of minutes, preparation of budgets, etc. to others. Corp. Code §7210. Can managers attend meetings and take minutes? Of course they can.

Professional Certification
. Managers can be an extremely valuable resource for boards. Professional standards for managers have steadily grown over the years because of excellent training programs put on by the Community Associations Institute (CAI) and the California Association of Community Managers (CACM), which lead to certifications by each organization. The top certifications are the PCAM (Professional Community Association Manager) and the CCAM (Certified Community Association Manager). Each requires a specific number of years of experience plus classroom training taught by attorneys and seasoned management professionals.

RECOMMENDATION: The smartest thing associations can do is to hire certified managers to attend their board and membership meetings, take minutes, and make suggestions on the conduct and content of meetings.

OPEN MEETING ACT
FEEDBACK

Open Meeting Act. I disagree that there is an “open meeting” issue when a majority of directors are on the Finance Committee. If what you say is accurate, directors would essentially be prohibited from serving on committees where there would be a quorum of directors present without giving notice to all the owners. Other attorneys have opined exactly the opposite. -Robert B.

RESPONSE: Directors are not prohibited from serving on committees but when it comes to a quorum of directors I take the more conservative position—one I believe the courts would take. The Open Meeting Act defines a board meeting as follows:

“Meeting” includes 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 matters that may be discussed in executive session. (Civ. Code §1363.05(j))

To get around this restriction, some argue that board members serving on committees cease being board members and become committee members. It’s a creative argument but I don’t believe it would survive judicial scrutiny. The statute makes a specific exception for executive sessions of the board but no exceptions for committee meetings, workshops, or any other kind of meeting where a quorum of directors get together to discuss HOA business.

Standing Committees. The Open Meeting Act was modeled on the Brown Act, which means we can look to the Act for guidance whenever in doubt–something the courts would likely do. Under the Brown Act, there are two kinds of committees: standing committees and ad hoc committees. Standing committees are required to be open to the public. (Govt. Code §54952(b)). A parallel for HOAs would be the Architectural Committee. As such, architectural committees, with or without directors, should be open to the membership.

Ad Hoc Committees. Ad hoc committees are advisory in nature, created for a specific task and automatically dissolved when their task is completed. Under the Brown Act, an ad hoc committee with a quorum of the board on the committee must be open to the public. (Govt. Code §54952(b)). I believe a judge would find the same principle was intended in the language of the Davis-Stirling Open Meeting Act.

RECOMMENDATION: If a quorum of directors is on a committee, I believe the committee should give four days notice of its meetings and post an agenda. If boards want to avoid giving notice when ad hoc committees meet, then a quorum of directors should not be on the committee. If your association’s legal counsel believes differently, you should follow your attorney’s advice.

ETHICS FEEDBACK


Why the Need? Why is there a need for a written ethics policy? The board in my association drafted an ethics policy. A board member, who is also an attorney, refused to sign it because ethical requirements are already covered by statutes and case law. -Arthur Z.

RESPONSE: The value of a duly adopted written ethics policy is that it clearly describes what directors can and cannot do. Because directors are volunteers, they don’t always know what is allowable and what is not. Even so, you cannot make directors sign an ethics policy unless it is required by your bylaws as a qualification for serving on the board. If you amend your bylaws to include it as a requirement, candidates who refuse to sign can be disqualified from election to the board of directors.

-Adrian J. Adams, Esq

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