Nov 18

QUESTION: Can an association restrict piles of smelly shoes in front of an owner’s front door? It has been suggested that if this is a cultural belief the HOA could be faulted for making them remove their shoes.

ANSWER: Smelly/unsightly footwear can be restricted under the nuisance provision of your CC&Rs. In a condominium developmentwhere other owners and their guests must walk by the unsightly shoes in a common area hallway, the restriction is reasonable. Cultural sensitivity is a two-way street. Residents should be respectful of their neighbors and keep their shoes inside their units.

SPENDING AND REPLACING
RESERVES

QUESTION: Our board insists that if funds from the reserves are used in year one to repair a reserve item then the association must replace the reserves in year two by the amount used in year one. Is this correct?

ANSWER: That is not what the law requires. Reserves are built up over time. If a 20-year roof has reached the end of its life and $400,000 is spent from reserves to replace it, the association is not required to replace the money the following year. Instead, $20,000 per year is put into the account for the next 20 years (the life of the roof). At that point you have enough money to replace the roof again.

Variables. The amount actually transferred into reserves annually will vary over time as your reserve specialist factors in variables such as inflation, interest earned on the funds, projected lifespan of the roof (which depends on how well the roofs are maintained in the intervening 20 years), etc.

Borrowed Money. If your board borrowed money from your reserves, then it needs to be replaced the following year. Using the roof example, if you had $400,000 in your reserve account but it was allocated to other items (painting, street paving and plumbing) with none set aside for roofs, the board would have to borrow the entire reserve fund to replace the roofs. In that case, the board is correct that the funds would need to be replaced the following year.

COMMERCIAL SIGNS

QUESTION: We have some board members who want to regulate commercial signage on cars, such as a real estate sign or a business sign for an offsite business under a CC&R restriction that does not allow signs on lots. Is this legal? Someone said it is a violation of free speech. Could they then regulate car colors, etc.?

ANSWER: Some car colors should be regulated–if you see a lime green car, call the police. When it comes to commercial signage, most associations prohibit yard signs, business signs in windows, etc. “Commercial” signage advertises products or services the advertiser hopes you will purchase. When it comes to the Davis-Stirling Act, there is no protection of commercial signage. As for the First Amendment, it primarily protects political speech, and to a lesser extent commercial speech, from governmental interference. A homeowners association is not a governmental entity–it is a private organization with private restrictions, which means the First Amendment does not apply.

Since homeowner associations are residential, it is more than reasonable that they restrict the display of commercial signage. No one wants their neighbor putting a sign in their yard that they’re selling medical marijuana or providing palm reading services. Or parking a trailer in front of their house with a sign advertising cigarettes. Homeowners would be up in arms. Does that mean associations can regulate signage on vehicles? Yes it does. As a practical matter, the explosion of advertising that is painted, printed or tattood on everything that moves, including people, makes it difficult to regulate.

RECOMMENDATION. Some CC&Rs are silent on signage issues while others are explicit. Your board should work with legal counsel to review the authorizing language in your CC&Rs and then draft reasonable restrictions on vehicle signage.

ALLIGATOR EATS GUEST
HOA SUED

There is a case out of Georgia that addresses the issue of whether a homeowners association is responsible for protecting its members from attacks by dangerous wildlife.

The Landings HOA is a gated community near Savannah, Georgia in an area where alligators are indigenous. The Association warned residents in newsletters and on its website that alligators lived in its lagoons and were dangerous. It did not, however, post signs near the lagoons.

Ms. Williams was house-sitting for her daughter who was vacationing in Italy. Behind her daughter’s house was a common area park adjacent to a lagoon. Ms. Williams went for a walk sometime after 6:00 p.m. At about that time, several boys reported hearing a woman crying for help. The next day Ms. Williams was found floating in the lagoon. An eight-foot alligator was found with her body parts in its stomach. The heirs sued the association for wrongful death.

The Georgia Supreme Court found for the association because testimony showed that Ms. Williams had knowledge that dangerous alligators occupied the lagoons. Knowing that, she still chose to walk at night near a lagoon where alligators were present. The Court reasoned that Ms. Williams either assumed the risk of walking where she knew alligators were present or failed to exercise ordinary care by doing so.


RECOMMENDATION: The case might have gone against the Association if testimony had shown that the association had done nothing to warn residents. I suspect the board has since added signage around the lagoons. To read the court’s decision, see The Landings HOA v. Williams. California HOAs in areas where residents are exposed to dangerous wildlife should talk to legal counsel about how best to protect against potential liability.

NO NEWSLETTER

Sorry, no newsletter next week. My wife and I will be spending Thanksgiving with family. I hope all of you do the same.

FEEDBACK

Conversion Charts #1. Thank you, thank you, thank you, Adrian, and again thank you, for the two conversion charts on the old and new D-S Act. We will now be able to digest the differences before 1-1-2014. -Sam D.

Conversion Charts #2. Kudos to you for being ahead of the curve once again and providing a conversion chart we can access until we get used to the DS rewrite. -Cassie T.

Conversion Charts #3. Wow, thanks for taking time to do the conversion charts! Now I have more stuff to read. -Lorna L.

Conversion Charts #4. I understand management companies are considering including the Davis-Stirling conversion chart in resale disclosure packages. Considering the changes go into effect January 2014, I’m concerned it may be premature to refer to the re-numbered DS Act as it may confuse or mislead recipients. What are your thoughts? -Sheri C.

RESPONSE: It is a little premature but I don’t see any harm if the chart is clearly marked that the new statutes don’t go into effect until January 1, 2014.

Smoking Ban. You asked readers to share whether they had a ban on smoking in their governing documents. We first banned smoking in the common areas back in 2009. In 2010 members adopted a complete ban ANYWHERE within the four corners of the parcel (common area, inside the units and sidewalk). We extended the ban to members, residents, guests and vendors. -Sandy O, San Francisco.


Adrian J. Adams, Esq.
Adams Kessler PLC

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Nov 04

The Davis-Stirling Act is currently found in Civil Code sections 1350 to 1378. The DS Rewrite uses all new Civil Code sections that start at 4000 and go to 6150. Because the Act’s content was completely restructured, there is no straight across correlation of section numbers between the old and the new.

As a result, trying to find and compare changes in the language between the two Acts can be daunting. To make the task easier, I’ve added two Conversion Charts to the website. The first takes the current Civil Code numbering and shows where all the sections and subsections are located in the Rewrite. The second chart takes the new Civil Code numbering and shows where the corresponding provisions are found in the existing Code. Links and cross-links will be added as time permits.

REMOVE MEMBERSHIP
FROM DELINQUENT OWNER?

QUESTION: We have a property owner who is in arrears. Can we remove him from membership in the HOA? Our bylaws state that we can suspend voting privileges, which we have done, but we would like to remove him completely from the membership.

ANSWER: Sorry, you can’t remove his membership. Membership is automatically conferred by ownership of a lot or condominium. Civil Code §1358. The only way you can take away a delinquent owner’s membership is to foreclose on his property.

REMINDER ABOUT
LENDER FORECLOSURES

All associations should record a blanket “Request for Notice of Sale” to receive notice of lender foreclosure sales. Otherwise, boards will not know who to bill for assessments after the sale occurs.

Recording the Request is important if associations want to benefit from AB 2273 which goes into effect January 1, 2013. This bill requires lenders to record foreclosure sales within 30 days of the sale. It makes banks accountable for the properties they acquire, i.e., once the sale is recorded, the lender must start paying HOA dues and special assessments. Contact us if you need assistance.

INVESTORS HAVE
EQUAL VOTES


QUESTION: Our board allows owners of more than one property (rentals) to have equal voting rights for each property. Is this legal?

ANSWER: Your board is not the culprit. Voting rights are established by your governing documents, which ties them to ownership. As a result, owners of a separate interest in a common interest development have the right to cast votes for each property they own–that includes investors.

Problems. Allowing investors to own multiple properties can create problems for associations. The first is the higher rental population they bring to the development and the second is the voting power the investors wield. If an association has cumulative voting, the investor’s influence is magnified even further.

Solutions. To contain the problem, associations can amend their CC&Rs to limit ownership to one or two properties per person or entity. At the same time, HOAs should consider adding a requirement that no buyer can rent his property until he has resided in the residence for at least one year (some associations make it two years). This will deter investors from buying units and immediately turning them into rentals. It will bring owner-occupants into associations, which is what you want.

HARDWOOD FLOORS

QUESTION: An owner on the 2nd floor wants to install hardwood flooring. I can’t find anything that says that the owner installing the floors must seek approval from the owner below, just the HOA board. Is this correct? I was always under the assumption that the owner that lives below would need to approve the floors.

ANSWER: Unless your governing documents provide otherwise, the architectural committee (or the board, depending on your documents) reviews and approves, modifies or disapproves the remodel application. Some associations (especially PUDs) require notification of surrounding neighbors when remodel applications are submitted so neighbors can attend the architectural meeting to observe the review process. Neighbors can voice their concerns but they cannot veto the proposed project. If the owner meets the association’s architectural guidelines, he/she should receive approval for the proposed work.

RECOMMENDATION: When it comes to hardwood floors you need to have objective standards that fit your building’s particular construction. Some buildings, especial condo conversions, are so poorly constructed that there is no practical or cost effective way to install hardwood floors that would not create a nuisance to unit owners living below them. Your board should adopt strong architectural guidelines and then enforce them in a consistent and evenhanded manner.

FEEDBACK

Adrian’s Angels. Kudos to Adams Kessler for their team of amazing lawyers! I have had personal experience with Karen Jacobs whom I found to be thoroughly knowledgeable. She listened to me instead of acting as if I was an intrusion in her day. I had great success with her in our dealings. If the rest of the team is as personable and competent, I offer that the women of AK are more than angels–dare I say it, they are GODDESSES. -Anita H.

Free Riders #1. I loved your answer to “FREE RIDERS”! Very well said! -Ken H.

Free Riders #2. Kudos on your response regarding suspension of common area privileges. I find this practice to be one of the most successful in collecting debt on behalf of my clients. Last month alone, I was able to secure over $30K between two associations either through payment in full or a one year payment plan. I find it funny that revocation of parking transponders, parking tags and pool use is more persuasive than legal action. This process is especially useful when there are tenants in a unit; as soon as tenants are copied on the hearing letter, they put pressure on the unit owner. -Vicki M.

Free Riders #3. Please tell Adrian that I send a HUGE thank you for his comment in yesterday’s column that pertained to “giving people a free ride.” Amen!!! -Phyllis H.

Free Riders #4. “Giving people a free ride at others’ expense is a poor business practice we reserve for our federal government.” Bravo! And Amen!! -David C.

NOTE: I had two readers who took offense at the comment because they thought it had political connotations. In our current overwrought political season? Perish the thought! -Adrian

DRE Warning. Regarding the DRE “Consumer Warning,” I noticed on page 3 under the second bullet that the DRE implies that an owner is entitled to the “Delinquent Report” from the association. Is that true or am I misunderstanding the intent? -Bob F.

RESPONSE: Yes, owners are entitled to financial information, including a delinquency report. Boards should already be receiving them in their monthly financial reports. However,
if names are in the report they need to be redacted before giving copies to owners.

No Smoking #1. We are a 36-unit condo association that recently adopted a no smoking policy both inside the units and in any part of the common area EXCEPT for a designated smoking area in the common owners parking lot. We adopted the policy based on the nuisance clause in our CC&Rs. -Rick H., Canyon Lake, CA

No Smoking #2. Our association has the following restriction: “No owner, family member, tenant, resident, guest, business invitee or visitor shall smoke cigarettes, cigars, or any other tobacco product anywhere within the boundaries of BTH. This prohibition shall include the outside common area, enclosed common area, exclusive common area (balconies and patios) and all units within the project.” -Jonathan P., Berkeley, CA

No Smoking #3. I have one association in Tiburon that doesn’t allow smoking anywhere on the property, including inside units. “No Smoking Property” signs are at each property entry. -Trudy M.

NO NEWSLETTER. Sorry, no newsletter next week. I am working on a couple of litigation matters that need my attention. I think we could eliminate litigation altogether if we got rid of all the people. But, since we can’t, HOAs will always be unruly and litigious. We can’t put unrelated people in close quarters, give them joint ownership of property, tell them to govern themselves and expect otherwise.


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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