Jul 29

Concerns have been raised because the California Legislature suspended the Brown Act (claiming it will save $96 million over the next three years). The suspension means that boards no longer need to (i) post meeting agendas, (ii) include a description of items to be discussed in closed session, and (iii) disclose what occurred in closed-session meetings.

What impact does this have on homeowner associations? None. The Brown Act applies to governmental agencies not common interest developments. HOAs are governed by the Davis-Stirling Open Meeting Act, which has not been suspended. Association boards are still required to post agendas and report what occurs in executive session meetings. Boards affected by the legislature’s suspension of the Brown Act are county boards, school district boards, water boards and city councils.

COMMENT: I can think of better ways for California to balance its budget. Hiding behind closed doors is not one of them.

DIRECTORS AT
COMMITTEE MEETINGS?

QUESTION: Can a majority of directors attend committee meetings without violating the Davis-Stirling Open Meeting Act?

ANSWER: This issue is not covered in the Davis-Stirling Act. Whenever Open Meeting issues are unclear, we can look to public agency rules for guidance. There are two: the Bagley-Keene Act and the (now suspended) Brown Act.

Bagley-Keene Act. The Bagley-Keene Open Meeting Act governs meetings of local governments and closely parallels the Brown Act. Bagley-Keene states that boards have three duties: (i) give adequate notice of their meetings, (ii) provide an opportunity for public comment, and (iii) conduct their meetings in open session, except where a closed session is specifically authorized. All three principals were incorporated into the Davis-Stirling Open Meeting Act.

As provided for in Bagley-Keene, not all board gatherings violate the Act. A majority of directors can gather for the following purposes provided they do not discuss board business among themselves:

  • A conference or similar gathering open to the public. (Gov. Code §11122.5(c)(2))
  • An open and publicized meeting organized to address a topic of state concern. (§11122.5(c)(3))
  • A purely social or ceremonial occasion. (§11122.5(c)(5))
  • An open and noticed committee meeting, provided board members who are not members of the committee attend only as observers. (§11122.5(c)(6))

Brown Act. In addition to the above, the Office of the Attorney General issued an opinion that under the Brown Act board members may attend committee meetings provided they do not ask questions or make statements. (81 Ops.Cal.Atty.Gen. 156.)

CONCLUSION: In my opinion, if homeowner associations follow state guidelines, a majority of directors can attend committee meetings provided (i) the committee meeting is open to the membership, (ii) notice has been given (the same as board meeting notices), and (iii) directors who are not members of the committee do not participate in committee discussions (otherwise it becomes a board meeting and should have been noticed as such).

Kudos to board member Anne Seifert for bringing this to my attention. For more information, see Guide To Bagley-Keene Open Meeting Act.

EXECUTIVE SESSION
VOTING

QUESTION: Can the president of the board of directors vote at an executive session other than to break a tie??

ANSWER: The president can vote on all issues in all meetings of the board (Robert’s Rules, 11th ed., pp. 487-488.), whether open or executive, provided he/she does not have a conflict of interest.

FEEDBACK

Newsletter #1. CONGRATULATIONS on another great newsletter. I was just introduced to your letter four months ago and wish I had known about it sooner. Keep up the good work, it’s very much appreciated and very helpful. -Al. H

Newsletter #2. Love your weekly newsletter. Send it to all the area reps in our condo complex (an area rep. watches over the 20 small streets of condos and reports any problems at monthly meetings). -Jeannine D.

ADA Compliance. I just read your recent Davis-Stirling Newsletter and want to thank you for including my question regarding ADA pool compliance. As always, your response was thoughtful and informative. Thank you very much for taking the time to respond and publish this information. -Pat C.

Manager Certification. In addition to certifications, HOAs should inquire about a manager’s experience with plumbing, construction, solving problems, construction management etc. I do not think this is covered in any of the certification requirements. -Michael G.

RESPONSE: I know some boards ask prospective managers about their maintenance experience. Others focus on financial training. Some prize computer skills. I’ve attended interview sessions where directors ask really inappropriate questions about age, ethnic origin, marital status, number of children, etc. I had one director ask a candidate his birth date–not because she wanted to know his age, she wanted to know his Zodiac sign. In the discussion that followed, she based her hiring decision entirely on his sign. He was Taurus and that’s all she needed to know–she voted for him. He turned out to be a good manager. Who’s to say?

Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.”
When your association needs legal assistance, contact us at (800) 464-2817 or info@adamskessler.com.

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Jul 22

QUESTION: Are we in trouble? We just found out our manager (for the last 2 years) is not certified nor licensed. What should our board do?

ANSWER: There is no need to flee the country; you’re not in trouble. There is no requirement that association managers be certified nor is their any licensing requirement (except for business licenses for management companies). There is, however, a requirement that managers make certain disclosures to the associations they manage.

Certifications. Even though certifications are not required, they are important. Designations are offered through the California Association of Community Managers (CACM), the Community Associations Institute (CAI) and the National Board of Certification of Community Association Managers (NBC-CAM). Following is a list of some of the more common designations:

DESIGNATION                                                              FROM

AAMC    Accredited Association Management Company      CAI
AMS      Association Management Specialist                      CAI
CCAM  Certified Community Association Manager              CACM
CMCA  Certified Manager of Community Associations       NBC-CAM
LSM     Large-Scale Manager                                           CAI
PCAM  Professional Community Association Manager          CAI

RECOMMENDATION: Boards should look for professional designations when hiring a manager. They show that a manager has achieved certain levels of training in the management of common interest developments. If the manager is an employee of the association, boards should encourage and pay for the continuing education of their managers. It is worth the cost because knowledgeable managers help steer their associations through the maze of regulatory compliance thereby reducing potential liability and making it easier for volunteer directors to meet their fiduciary duties.

MANAGEMENT FEES

QUESTION: How much (in general) does a property management company charge a homeowner’s association to manage the community?

ANSWER: Management fees will vary depending on (i) the location of the development (north, south or central California and inner city versus rural), (ii) the type of development (condo or single-family homes), (iii) the size of the community (500 units or 5), (iv) the level of service being sought (financials only or full management) and (v) the quality of managers assigned to the account (seasoned managers with professional designations or kids fresh out of high school). The best way to compare prices is to get management companies to bid (apples to apples) on the management services you desire.

RESERVE WEBINAR
REMINDER

This Wednesday (July 25) I will be participating in a follow-up webinar with reserve specialist Robert Nordlund. There were so many questions from our May webinar that this one will focus on answering questions on the legal aspects of reserves.

To sign-up for this free offering, click on one of following links: 11:00 a.m. session (Pacific Standard time) or the  1:30 p.m. session.

ADA POOL COMPLIANCE

QUESTION: We are a gated community of private detached homes. If we allow rental of of our community park (including the pool) for weddings, parties and fundraisers where non-residents attend is the HOA subject to the new ADA pool requirements?

ANSWER: This question keeps popping up. You are referring to the new ADA “public accommodation” pool requirements under Title III that go into effect January 1, 2013. The new regulations state that swimming pools open to the public must have at least two accessible means of entry. “Accessible” is defined as swimming pool lifts, sloped entries, transfer walls, transfer systems and pool stairs. Such requirements do not apply to private organizations such as homeowners associations. However, there are exceptions.

Renting to the Public. Renting your pool facilities to the public is one of the exceptions. If you are renting to the general public and the “weddings, parties and fundraisers” you referred to involves swimming, you will need handicap access at least for the duration of the events. That can be accomplished with a portable chair lift. If guests accidentally swim in the pool (somebody falls or is pushed into the pool)–you don’t need to provide handicap access. However, other facilities, such as bathrooms, may need to be modified for handicap access under other provisions of Title III.

Renting to Members. If your association rents its facilities to members only, ADA requirements do not apply. If your members invite guests who are not members, ADA rules might apply but it is unclear. I can tell you from experience that handicap advocates tend to be aggressive and look for excuses to chase associations and businesses through the courts. That does not mean they would prevail but the association would have to endure the expense and uncertainty of a lawsuit.

RECOMMENDATION: Even if not required, boards should plan on making all facilities ADA compliant. This not only benefits handicapped members of the association, it avoids potential litigation. In the long run, it’s cheaper to upgrade your facilities than to litigate over them. In the meantime, when it comes to renting out your facilities, boards should talk to legal counsel about how best to reduce their risk.

FEEDBACK

Unruly Homeowners #1. DON’T send those people to Barstow!!! Barstow is a nice little town (maybe we could improve it by getting rid of Walmart). Ruby Ridge would be a much better fit for renegades. I implore you to have a little sympathy for the high desert folks. Thank you for all your hard work. -Tom G.

Unruly Homeowners #2. I enjoyed your response about the unruly homeowner who should live in a mobile home on a one acre lot in Barstow. Actually, the Lucerne Valley would be much better because it’s less crowded or maybe by the Trona Pinnacles. -John A.

RESPONSE: I had been shipping dysfunctional condo owners to North Dakota but state officials slapped me with a restraining order–something about an environmental disaster. I will take pity on Barstow, I didn’t realize we had so many alternate sites for anti-social homeowners–Ruby Ridge, Lucerne Valley, Trona Pinnacles . . . (hope they don’t require an environmental impact report).

Unruly Homeowners #3. Thank you for another interesting newsletter. I appreciate your comments on free speech and that there are limits, especially in meetings and other formal, organized events. At City Hall, the council here allows attendees three minutes at the beginning of the meeting. Anybody who fills out an index card with their name and topic is called to the podium in turn. It works because every speaker is timed and respectfully asked to sit down when the light comes on at the end of their three minutes. Nobody gets extra time and nobody is prevented from speaking. Everyone feels heard and occasionally the council learns something that matters. HOAs should have a similar process that is consistently used so that nobody appears to get favor and nobody feels treated unfairly. Residents who feel they have legitimate gripes, recommendations or compliments can also write to directors just as we write city council members and legislators. -Al P.

Managers. Thanks for the kind words for managers. You’re right, it’s difficult to please everyone and sometimes it’s difficult to please anyone in this job. -Alex F.

Signature Cards. Your piece on bank signatures is important. As a former Sr. VP and CFO of a nationally chartered bank, I can tell you that banks stopped matching signatures at least 40 years ago. Signing the check is a minor ministerial duty at the end of the control process. There are a number of other “pre-signing” risk management processes that should be in place as the work is authorized, completed and approved for payment. -Don H.

Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.”
When your association needs legal assistance, contact us at (800) 464-2817 or info@adamskessler.com.

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Jul 15

QUESTION: As a committee chair and a board member, I make committee reports and special presentations to the board. Do I need to recuse myself from voting on recommendations I make to the board simply because I am committee chair?

ANSWER: The only time you need to recuse yourself is when you have a conflict of interest, i.e., when matters come before the board where you or your family will receive a benefit different from other members of the association. Otherwise, you can make motions and vote on all matters recommended by your committee.

RESERVE ACCOUNTS


QUESTION: I am informed that reserve funds must be deposited in a “Two Signature Required” account. I am unable to find a bank that still offers this type of account. Are there any that you know of??

ANSWER: The Davis-Stirling Act does not require two signature bank accounts but, rather, two-signatures (a small but important distinction):

The signatures of at least two persons, who shall be members of the association’s board of directors, or one officer who is not a member of the board of directors and a member of the board of directors, shall be required for the withdrawal of moneys from the association’s reserve accounts. Civil Code §1365.5(b).

In the old days (10-20 years ago), banks helped boards comply with the statute, i.e., a bank employee compared signatures against a signature card before processing a check. Because all banks now use bulk filing, inclearings and automated processing, two-signature accounts are no longer feasible.

Inclearings & Automation. Unlike over-the-counter checks, which are deposited at the same bank they are drawn against, “inclearing” checks are deposited at other financial institutions and processed by those institutions through a clearing house such as the Federal Reserve before returning the check to the bank of origin. Once checks enter the system, they are scanned and processed in bulk using high-speed automation instead of being processed one check at a time by a live person. It saves banks time and money and speeds the transfer of money. It also means banks can no longer compare checks against signature cards.

Banks Held Harmless. Banks can still place an alert on accounts if so requested. Arguably, it means a lone board member cannot walk into a branch and clean out a two-signature account. Even so, language in the signature card and bank disclosure documents hold the bank harmless if a one-signature check is honored by the bank. That means an association cannot go after the bank if a board member empties the reserve account and absconds with the money. Instead, the HOA must go after the director.

RECOMMENDATION. Because the two-signature rule applies to associations not banks, boards cannot rely on banks to monitor checks for them. Instead, boards must adopt internal controls and carefully monitor their reserve accounts for any unusual activity.

Thank you to Jolen Zeroski, Vice President/Senior Relationship Manager of Union Bank and Jan Hickenbottom, Vice President/Association Bank Services for First Bank for their assistance with this question.

FOLLOW-UP Q&A ON
RESERVE STUDIES


I will be participating in a follow-up webinar with reserve specialist Robert Nordlund. There were so many questions from our May session that we are putting on another one just to answer questions.

Sign-Up. If you want to attend, select a time and sign-up by clicking on one of the following links: 11:00 a.m. session (Pacific Standard Time) on July 25 or the 1:30 p.m. session that same day.

FEEDBACK

Disruptive Owner #1. Which medication would you suggest for the clueless homeowner? And who does the zipping of the mouth? Great newsletter. A devoted fan. -Joye S.

RESPONSE: As for medication, I will defer to a doctor (I wouldn’t want to practice medicine without a license). To establish order at meetings, boards can impose fines, temporarily recess meetings and eject unruly attendees. If disruptive individuals refuse to leave, the police can be called. In one meeting I attended, an owner was out of control and refused to calm down. The police responded and tried to calm the man. He started poking one of the officers in the chest. The homeowner was immediately cuffed and stuffed (politely put into the back seat of a police cruiser) and taken to jail. He sued the association, the city and the arresting officer and lost. He appealed and lost. Some people are just not suited for HOA living–that’s what mobile homes on one-acre lots in Barstow are for.

Disruptive Owner #2. Are owners prohibited from speaking or can the board invite comments during their meetings? -Carolyn D.

RESPONSE: Boards always have the right to invite comments from the audience. Small associations often operate informally and allow wide audience participation throughout their meetings. In larger associations, board meetings are more formal (like city council meetings). Even so, boards of large HOAs can and sometimes do ask for audience input on particular agenda items.

Disruptive Owner #3. Your article is outrageous! Homeowners don’t have to zip their lips–they have free speech rights and can say whatever they want whenever they want. -Jon W.

RESPONSE: Ah yes, the “free speech” mantra–it gets tossed around liberally by people who have no idea what they’re talking about. The plight of volunteer directors harassed by free speech bullies is a recurring theme. Some owners believe they have a divine right to harangue board members, disrupt meetings and verbally harass anyone in the room. Such behavior can discourage and frustrate directors, interfere with association operations and drive up legal expenses. Does that mean all board members are pure as the driven snow? Of course not. Some directors are awful. Give them a little bit of power and it goes to their heads. Everyone needs to chill out (an obscure legal concept). Members can speak freely during the Open Forum portion of the meeting. After that, the association’s elected representatives (board members) must be allowed to perform their duties. Respecting the process makes for smoother meetings.

Manager’s Plight. Thanks so much for shedding a small bit of light on the manager’s point of view. And, funny enough, despite all the reasons you stated in your article, I still love what I do and work hard for my association every day. -Stacy G.

Condo Porn. Last week you discussed whether HOAs have the right to inspect units. We believe a tenant is filming porn in his unit. What are our options?

RESPONSE: Depending on your governing documents, filming porn could constitute a nuisance and violate CC&R prohibitions against running a business in a unit. Inspecting the tenant’s unit would probably not yield any evidence of a CC&R violation since it is unlikely the tenant would film while the board inspected. Thus, you would need indirect evidence of business activity: excessive traffic to and from the unit, advertising for budding young stars to be filmed in the unit, a business license listing the unit’s address, internet postings of the work product where the unit can be identified, etc. If you have sufficient evidence of business operations, the board can impose fines and suspend privileges. If violations continue, you can head for court.

Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.”
When your association needs legal assistance, contact us at (800) 464-2817 or info@adamskessler.com.

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Jul 08

QUESTION: Our board has allowed our manager to control everything; with very few exceptions. He presides at meetings, takes minutes and is protected by our liability policy. Why are these managers not being held accountable for what they do?

ANSWER: They are. A manager’s performance is reviewed by your duly elected representatives, the board of directors. If the manager does not meet the board’s expectations, he can be disciplined up to and including termination of his employment. In the situation you described, the board may be very happy with your manager’s ability to multitask. If the board is happy with the manager but the membership is not, members have recourse–they can elect a new board and change managers.

Management Stresses. Before you rally the villagers and storm the office with torches and pitchforks, you should be aware that being a manager is not easy. Managers are expected to (i) be experts on everything, (ii) work evenings and weekends, (iii) follow directions from boards with whom they sometimes disagree, (iv) tell homeowners “No” when they want things they can’t have, (v) enforce rules against residents who frequently threaten their jobs (and, from time to time, threaten them physically), (vi) repair the common areas without spending any money and (vii) never make any mistakes.

RECOMMENDATION: If you have concerns about the manager, you should politely raise them with the President.

MEMBER PARTICIPATION
IN BOARD MEETINGS

QUESTION: We have a homeowner who interrupts our board meetings to question and comment on every item that comes before the board. She insists that as a member she has a right to participate in our meetings and as a citizen she has a “Free Speech” right to comment on agenda items. Is this true?

ANSWER: No it’s not true. Your clueless homeowner can be ejected from board meetings just as she would from city council meetings if she interfered. She may have “free speech” rights but those rights are subject to time, place and manner restrictions.

Open Forum. If your disruptive homeowner wants to talk about agenda items, she can do so during the Open Forum portion of the meeting. Once Open Forum is closed, she must sit down, zip her lips, and allow the board to carry out their duties. If she can’t help herself and feels compelled to participate in board discussions, they have medication for such conditions.

SEARCH CONDOS?


QUESTION: Does the association have the right to come into a condo to search?

ANSWER: Search for what? Search for drugs? No; that’s a police matter. Search for water leaks? Yes. Search for insect infestations? Yes. Inspect HOA fire alarm systems? Yes.

Surrounded by Common Area. Your governing documents undoubtedly contain provisions giving the association the right to inspect, maintain and repair the common areas. Your condominium is surrounded by common area walls, ceilings and floors. That sometimes means the association must enter units to inspect and repair the common areas (such as plumbing leaks).

I want to WELCOME the many new clients who joined the Adams Kessler family over the past few months. We look forward to working with you. -Adrian Adams
DAVIS-STIRLING
REWRITE

Judge Stirling and I were pleased to visit with a room full of board members at Equity Management’s Summer Symposium.
We discussed the Davis-Stirling rewrite and its impact on associations and fielded a lot of insightful questions from the audience. See Facebook for pictures of the event.

FEEDBACK

Reserves #1. Our opinion mirrors yours that using funds designated for reserves for any other purpose is borrowing. What about those who argue that budgets are annual and as long as the reserve contribution at the end of the year matches the amount budgeted, no borrowing has occurred? -Scott Clements, Reserve Studies Inc.

RESPONSE: If the board delays a reserve contribution for 30 days because owners are slow paying their dues, that’s not borrowing. If insurance premiums unexpectedly increase and the board uses reserve allocations to pay the increase, that’s borrowing. The diversion of funds must be reported to the membership. The board should then impose a small special assessment to repay the reserves or reduce operating expenses to make up the difference. Being open and transparent with the membership about financial issues benefits everyone.

Reserves #2. One of the big red flags to banks is underfunded reserves, it screams special assessments. If reserves are underfunded, property values may diminish because banks are less likely to lend. Operating expenses are for keeping the place looking nice and functioning well; this will get Realtors to show the property, healthy reserves will encourage banks to offer mortgages. -Kingsley M.

Practicing Law #1. How can anyone function in an HOA environment without “practicing law”?? Does reading a section of the Davis-Stirling Act at a board meeting mean one is practicing law? -Gary S. 

RESPONSE: In most instances, directors and managers can read and follow the Davis-Stirling Act without consulting a lawyer. For example, the requirement that boards give four days notice for open meetings and two days notice for executive meetings does not require a legal opinion. More often than not, it’s situations involving common area damage and insurance that trigger calls to legal counsel. When an owner’s tub overflows and drenches four other units causing several hundred thousand dollars in damage, is it appropriate for the manager to advise the board that (i) there is no need to notify the insurance carrier because it was not the association’s fault and (ii) the association has no duty to repair the damage? Clearly not. The manager is advising the board about the association’s legal rights, duties and liabilities. If the board actually follows the manager’s erroneous advice, directors lose the protection of the Business Judgment Rule.

Practicing Law #2. As a meeting recorder and parliamentarian, I often direct boards to “get a written legal opinion.” Board members have a hard time understanding that the $250-$400 they spend on that written legal opinion may save them hundreds or thousands of dollars down the road. -Victoria C.

Adrian J. Adams, Esq.
Adams Kessler PLC

“Legal solutions through knowledge, insight and experience.”
When your association needs legal assistance, contact us at (800) 464-2817 or info@adamskessler.com.
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Jul 01

QUESTION: I went to a recent board meeting where it was discussed that instead of charging residents a special assessment to pay for an insurance deductible, they would suspend reserve deposits for three months. Is that legal and if so do they need homeowners’ approval to suspend reserve deposits?

ANSWER: Without a vote of the membership, boards are allowed to borrow from reserves to meet short-term cash-flow problems or other expenses. Civil Code §1365.5(c)(2). Suspending reserve deposits, in my opinion, qualifies as borrowing from reserves. Monies allocated to the reserve account are pledged in the reserve funding plan annually published to the membership, as well as the pro forma budget mailed to all members prior to the start of the fiscal year. Those funds are then collected from the membership for that purpose. Intercepting reserve monies before they are deposited into the reserve account or waiting until after they are deposited is a distinction without meaning. The result is the same–reserve monies are being used for non-reserve expenses. Such actions are allowed if done properly.

Notice of Intent to Borrow. Boards who plan to use reserve funds for non-reserve expenses must give notice to the membership of their intent. The notice must include the reasons why reserve monies are needed, the options for repayment, and whether a special assessment may be considered. Discussions by the board must take place in an open, noticed meeting of the board.

Notice of Decision. If directors authorize the borrowing of reserve funds, the board must issue a written finding, which is recorded in the minutes, explaining the reasons for the borrowing and describing when and how the money will be repaid. Civil Code §1365.5(c)(2).

Repayment Obligation. The borrowed money must be repaid to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the association, temporarily delay the repayment. Civil Code §1365.5(c)(2).

RECOMMENDATION: Reserve funds are important to the financial health of an association. Accordingly, boards must make every effort to build and preserve the association’s reserves. Failure to do so will inevitably result in deferred maintenance, deteriorating facilities, damage to common areas and owner’s units, painful special assessments, and potential litigation.

TREASURER
NOT ON THE BOARD

QUESTION: Can a homeowner who is not a board member assume duties as treasurer and approve payment of bills?

ANSWER: If your bylaws do not require that the treasurer be a board member, then the board can appoint a non-director to be treasurer. In addition, the board can delegate to the treasurer the authority to pay bills. Allowing a homeowner who is not on the board to be treasurer is not necessarily bad. It may be that the non-director is a CPA whereas none of the board members has any financial training. In that case, allowing the CPA to serve as treasurer benefits the association. If the membership wants to impose requirements that all officers be directors, it can do so by amending the bylaws.

Delegating Authority. When it comes to paying bills, the board can empower the treasurer to pay routine, recurring expenses such as utility bills and insurance premiums. As a safeguard, the board can set a dollar limit on the treasurer’s payment authority. However, the board is still responsible for overseeing the treasurer’s actions. Accordingly, the board should establish internal controls and regularly review the treasurer’s activities and the association’s finances. Otherwise, the association will be vulnerable to the improper handling of association finances up to and including embezzlement and the board could be held in breach of its fiduciary duties.

FEEDBACK

Father’s Day #1. What a treat to see you and your Dad, side-by-side, in this week’s newsletter. Thanks for all your good advice every week–and for taking the time to honor not only your Dad, but all our military members. -Keith D.

Father’s Day #2. The Korean Police Action was something I can never forget, and it makes me proud to be an American and to have served. I have the honor to wear the Korean Service medal like your Dad. -Jack S.


Father’s Day #3. I am with you and all the past and current true heroes–those who have made the ultimate statements by giving their lives and limbs. -Doug C.

Father’s Day #4. Semper Fi to your Dad, thank him for his service. Richard B. GY/SGT USMC, Ret.

Practicing Law #1. I asked the question about managers practicing law (which is what ours does) and your answer is the most complete and comprehensive that I have read and is greatly appreciated. Thanks so much. Linda L.

Practicing Law #2. Your article on managers practicing law is very helpful, but what about board members (or even non-board members) who are lawyers and render legal opinions to the board on HOA matters even though their specialty is outside Davis-Stirling? -Jim S.

RESPONSE: Seasoned lawyers know better than to render legal advice outside their specialty. They run the risk of giving bad advice and needlessly putting their malpractice insurance on the line. Unfortunately, there are always a few who let their egos get in the way of common sense.

Practicing Law #3. The newsletter on managers practicing law is about the most self-serving, narrow focused, income producing letter for lawyers that I’ve seen come out of your firm–ever! Your newsletter broad brushes areas of potential issues and tars every category with the ugly-brush of law-breaking because the topic could possibly lead to practicing law, a violation that indeed exposes an HOA manager to loss of insurance coverage and other liability. Each of the categories in your newsletter as an area where a court would likely deem the unlicensed practice of law is an area of routine HOA management functions that boards expect the HOA manager to handle and to know where the line is that might be crossed. -David C.

RESPONSE: Looks like I hit a nerve. California does not yet have case law involving CID managers. Florida, however, has spoken to the issue. The Florida Supreme Court determined that the following actions by association managers are examples of the unlicensed practice of law:

  • Determining unit owners’ voting rights;
  • Drafting proxies;
  • Determining use restrictions, including restrictions on leasing of units;
  • Determining whether membership in a master or recreational facilities association is mandatory and, if so, what fees are be charged per unit type;
  • Preparing and filing liens against owners for delinquent assessments;
  • Advising boards regarding the timing, method and type of notice required for association corporate action;
  • Advising boards what vote is required to take association action;
  • Advising boards how to or whether they can reject a sale or exercise a right of first refusal; and
  • Advising boards how the statutes pertain to them or what actions would violate the law or the governing documents. (See Supreme Court opinion.)

If you are routinely dispensing legal advice, you might want to consult a lawyer and put your E&O insurance on notice. Lawyers get themselves into enough trouble practicing law–managers should tread lightly.

Practicing Law #4. Thank you so much for your article on manager’s practicing law. As managers we are pushed and pressured many times to go beyond what we are supposed to do. I appreciate your team coaching me and helping me stay on track for all the associations I deal with. Kudos! -Evelyn P.

Practicing Law #5. YOU HIT THE BALL OUT OF THE PARK ON THIS ONE!!! WHAT A GREAT TOPIC. -Carl B.

Adrian J. Adams, Esq.
ADAMS KESSLER PLC


“Legal solutions through knowledge, insight and experience.”
When your association needs legal assistance, contact us at (800) 464-2817 or info@adamskessler.com.

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