Feb 24

QUESTION I serve on the board of a townhome association. We have a potential buyer of a unit that is a limited liability company. If the LLC becomes an owner and the LLC has 50 members, will all 50 members have rights to use the common area facilities?

ANSWER: Good question. Because of the uncertainty and to avoid potential litigation over the issue, we address it when we restate CC&Rs and bylaws for our clients. We define who does and does not hold voting and common area usage rights for (i) those who merely hold a security interest in the property, (ii) tenants, (iii) trusts, (iv) corporations, (v) partnerships, and (vi) other ownership entities. Doing so eliminates the problem. Your association should consider doing the same. If you have questions, contact us.

NOTICE OF
RULE CHANGE

QUESTION: We are changing several rules. May we send only the rules that are changing to homeowners? Our manager says we must send out all the rules for the 30-day homeowner comment period, not just the ones being changed or added. I do not read Civil Code 1357.130 that way. Who is correct?

ANSWER: You’re correct. The statute only speaks to proposed changes not the entire package.

The board of directors shall provide written notice of a proposed rule change to the members at least 30 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. (Civ. Code 1357.130(a).)

Once the rule change has been approved by the board, notice of the approval must be given to the membership before the change can take effect. Ideally, changes are incorporated into the rule book and a full set is mailed or delivered to the membership. For some associations that can be quite costly. An alternative is to mail the changes to the membership and post a full set of revised rules on the association’s website.

MORE ON
ABSTENTIONS

In recent newsletters I’ve discussed director abstentions. The issue generated follow-up questions because of the confusion people have about this issue. James H. Stewart, PRP, also known as “Mister Parliamentarian” was kind enough to offer a further explanation.

Non-Vote. People get confused because Robert’s Rules and the law differ. An abstention is NOT A VOTE, IT DOES NOT COUNT-EVER. It is not a protest vote, it is not a negative vote, it does not “go with” any side. An abstention simply means that the person is not casting a vote on a motion (the reason why does not normally matter).

Under Robert’s Rules, abstentions are not counted or even taken (asked for) in normal circumstances. The only time abstentions are recorded is if a roll-call vote is taken. It is good practice to record an abstention in the minutes if the reason for the abstention is a conflict of interest, otherwise it should not be recorded. There is no right to have a director’s abstention recorded, as that would give a privilege not given to other directors.

Corporations Code. Under Robert’s Rules, votes are normally taken as the number present and voting, which means that abstentions are not counted and do not matter. Confusion occursbecause the Corporations Code has a requirement that a board must have the affirmative vote of a majority of those present to adopt a motion. (Corp. Code §7211(a)(8).) While an abstention does not count, in that scenario it has the same affect on the outcome as a negative vote. For example:

Present and Voting: 10 present, 5 yes votes, 4 no votes, 1 abstention = motion passes as a majority of the votes cast are yes (9 votes cast, 5 yes, 4 no).

Majority of Those Present: 10 present, 5 yes votes, 4 no votes, 1 abstention = motion fails, as a majority of those present is 6.

FEEDBACK

Clubhouse Wi-Fi: Even if the board has authority to install Wi-Fi in the clubhouse, are there any potential problems? -Irene M.

RESPONSE: Yes. If the association installs an “open” or unsecure Wi-Fi system, there are risks. First, anyone can piggyback onto the wireless signal to commit crimes. A hacker can access other users’ passwords, bank accounts, emails, etc. Or they can use it to download child porn (which will bring federal agents knocking).

If an association intends to set up Wi-Fi in the clubhouse, it should be careful to set up a secure network with appropriate firewalls and use restrictions. For more information, read security tips from the U.S. government’s “Computer Emergency Readiness Team” on wireless technology. The association should also add a disclaimer and a “terms of use” page to the sign-in process where users agree to hold the association harmless.

City Ordinances. You wrote that because HOAs and local governments each have their own jurisdictions and enforcement powers, they operate independently and the ordinances of one do not void the rules of the other. Already, owners are asking me how can this be, as they reference city anti-smoking ordinances. In SF, the ordinance is no smoking in internal common areas of condos/apartments. These owners say, based on your explanation of an HOA lifting leash rule, we could lift our own anti-smoking rule despite the city ordinance. Is there a distinction between some ordinances which are basic such as leashes vs Health & Safety codes? -Joseph L.

RESPONSE: Some people struggle with the concept of overlapping jurisdictions; they think that if the association doesn’t adopt city ordinances, the association is somehow breaking the law. Boards enforce HOA rules and cities enforce their own ordinances. Unless the ordinance states otherwise (see mobilehome laws below), an association is not obligated nor is it authorized to be the enforcement arm of the city. If an owner violates the city’s anti-smoking ordinance, someone notifies the city and the city orders the person to cease violating its ordinance. If the association’s CC&Rs have a provision that any violation of a local ordinance is deemed a violation of the nuisance provision of the CC&Rs then the association can go after the person, but it does so as a violation of the CC&Rs not as a violation of the ordinance.

Mobilehomes. If an HOA is a mobilehome park, the park is under the jurisdiction of the Department of Housing and Community Development. HCD’s health and safety regulations do not permit free-roaming pets in mobile home parks, including cats, although I bet few mobilehome parks observe that portion of the regulation. In my experience, HCD will levy fines against the mobilehome park as well as the individual depending upon the violation. -Shelly D.

RESPONSE: You are correct. Mobilehome parks, in addition to the Davis-Stirling Act, fall under “Mobilehome Residency” laws. As such, mobilehome park operators are required to inspect their parks for loose domestic animals. “Dogs or other domestic animals, and cats (domestic and feral) shall not roam at large (free) in the park. Lots and park areas are to be maintained reasonably clean of domestic animal waste.” (Mobilehome Park Inspection Operator Information Booklet, p. 6, ¶ 5.) The requirement is based on Title 25. Housing And Community Development, Mobilehome Parks and Installations Regulations §1114.

Rewarding. I think it’s very rewarding being on the board, not thankless at all. To think you have the trust of your fellow homeowners to make careful decisions for them is a reward in itself. I wish more good people would get involved. I personally love it! -Mary J.

RESPONSE: If I could clone you, I could make a fortune renting you out to HOA boards around the state.


Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” Our lawyers are friendly; if your association needs legal counsel, contact us at (800) 464-2817 or info@adamskessler.com.

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Feb 10

QUESTIONWe live in a condo complex. One of our members has his unit filled to the ceiling with all kinds of debris, mostly combustible. According to our management company the HOA can do nothing to get him to clean up his unit and put it in a safe condition. Only after something happens in the unit, such as a fire, can anything be done. Is this correct?

ANSWER: No, you don’t have to wait for a fire. Addressing the issue, however, will be difficult and may require litigation depending on whether the person is a hoarder or merely a poor housekeeper.

Poor Housekeeping. The courts have already decided that associations cannot expect judicial relief if someone is merely a poor housekeeper. One association inspected an owner’s unit and found it in disarray. The board demanded that he cease using his downstairs bathroom for storage, clear his bed of all paper and books, remove boxes and papers stored in his unit, and remove all clothing he had not worn in the past five years. Books that were considered “standard reading material” could, however, remain in place. The matter ended up in court.

Although the association claimed the clutter was a fire hazard, the fire department disagreed and so did the court. The judge scolded the association for its “high-handed attempt to micromanage” the owner’s personal housekeeping. “Particularly galling” to the court was “the presumptuous attempt to lecture Cunningham about getting rid of his old clothes, the way he kept his own bedroom, and the kind of reading material he could have.” (Fountain Valley Chateau Blanc v. Dept. of V.A.) The lesson from the case is that the clutter in a unit must represent a true health and safety issue before an association can take action. Such is the case with hoarders.

Hoarders. Hoarding is a mental illness sometimes referred to as “Collyer Syndrome” after two brothers who lived in Harlem in the early 1900s. They were compulsive pack rats who collected junk for decades. Both were found dead in their 4-story brownstone surrounded by 140 tons of junk and debris. (See Wikipedia article.) As it was with the Collyer brothers, hoarding can be life-threatening not only to the hoarder but to other residents in a condominium development.

The debris in a hoarder’s unit will attract and breed roaches, ants, silverfish and rodents that then spread to the common areas and other units. In addition, the damp, unsanitary conditions become a breeding ground for mold and bacteria that migrate into common area walls and HVAC ducts. Finally, the mountains of debris in a hoarder’s unit become a fire hazard. If the association becomes aware of the problem and does nothing, it can be liable for damage to surrounding units and health injuries to other residents.

Inspecting the Unit. A board might learn of a hoarder’s presence when tracking down a water leak, looking for the source of insects or from complaints of foul odors. When such problems are traced to a particular unit, the association has a duty to investigate. All condominium CC&Rs have (or should have) an inspection provision allowing the association to enter a unit to inspect and repair the common areas surrounding a unit.

If the suspected hoarder grants access, the person making the inspection should be accompanied by a witness to guard against claims by the hoarder of harassment, theft, damage to property, etc. The witness can also help document (and testify to) the condition of the unit.

More often than not an inspection request will be denied. The person either knows he has an illness and wants to hide it or, worse, the sickness has reached a level where he is paranoid the association will steal his treasured possessions. If access is denied, a disciplinary hearing should be held and daily fines levied to encourage cooperation by the hoarder. If the hoarder continues to block access, a court order may be needed.

Public Agencies. If the inspection reveals health and safety hazards, the condition of the unit will need to be thoroughly documented (preferably with photographs). Demands can then be made to clean the unit. A hoarder’s sickness will often prevent him from complying with the demand. At that point, city/county health services and the fire department should be contacted. Public agency documentation of the conditions in the unit will be useful if subsequent litigation is warranted.

Case Law. A hoarding case in Tennessee is instructive. The grossly unsanitary conditions and extremely offensive odors in a unit in the Windsor Tower Condominiums created a nuisance and posed a threat to the health and safety of other owners. One witness who had been allowed in the unit testified that “the odor was so strong and offensive that he had to cover his mouth and nose because it caused him to gag.” There was testimony of “rotten food on floors and furniture, cabinets covered in rotting food, and a bathroom with a buildup of scum and urine.” In addition, mold was growing on windows, walls and curtains.

The association became concerned about the airborne bacteria and mold circulating from the hoarder’s unit into the building’s shared HVAC system. After protracted unsuccessful attempts to resolve the problem, the association filed suit. The CC&Rs had a provision that allowed the association to take possession of the unit and sell it. Accordingly, the board sought judicial sale of the condominium.

The court ruled for the association. It held that a forced sale of the unit was appropriate because of “Ms. Harris’s continual denial that any odor existed, the Association’s repeated and generous efforts over more than a year to help remedy the problem, Ms. Harris’s continuing failure to remedy the situation, and the gravity of the nuisance created by Ms. Harris and its impact on the other residents.” (4215 Harding Road HOA v. Harris.)

RECOMMENDATION: Our firm is currently working with two associations with hoarder problems. Because hoarding is an illness, associations cannot expect a quick, inexpensive solution when it discovers a hoarder in their midst. Accordingly, they should budget for extra legal expenses since court intervention will likely be needed to force resolution.

LOOKING FOR LAWYERS

Adams Kessler PLC is growing. We are expanding our team of talented attorneys in our Los Angeles office.

The ideal candidate will have 5-10 years’ experience in community association or real estate law. Litigation experience is a plus. We place a high value on writing skills and the ability to interact with people. Please contact Adrian Adams by email or at 310-945-0280.

FEEDBACK

Abstentions. We have directors who attend meetings with no knowledge of the topics being discussed because they do  not read their board packets. Can the rest of the board who are prepared to discuss and vote on issues ask the uninformed board member to abstain? -Bill C.

RESPONSE: Voting on issues without doing their due diligence can come back to bite directors who fail to take their duties seriously. Once elected or appointed to the board, directors become “fiduciaries” which requires a duty of due diligenceYou can always ask an uninformed director to abstain from voting but you can’t force him to abstain.

Cable TV. I thought the FCC banned bulk cable agreements. Didn’t you write an article about it in one of your newsletters? -Robert D.

RESPONSE: The FCC banned exclusivity provisions not bulk cable agreements. Exclusivity provisions prohibit members from using any other cable provider. The FCC deemed such restrictions anti-competitive and made them unenforceable. That means residents have the right to use another cable or satellite TV service if they so choose. Unfortunately, they still must pay for the service provided through the association even if they don’t use it. For more information, see Cable TV Exclusivity.


Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” Our lawyers are friendly; if your association needs legal counsel, contact us at (800) 464-2817 or info@adamskessler.com.

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Feb 03

QUESTION: Can a board make owners use one company for cable/TV/phone, negotiate a contract (and rack up legal fees for review), and then add those costs to dues? Doesn’t each owner have the option of who should provide them with those services? And if the board can negotiate a contract for the entire project, doesn’t it have to go to a vote of the membership?

ANSWER: It depends on your governing documents. If they grant the authority to do so, your board can enter into bulk cable agreements without membership approval. Absent any authorizing language, however, the board must take it to a vote of the membership. This issue was litigated last year in Pennsylvania. The board of the River Park House OA entered into a contract with Comcast which required all residents to pay for cable so the entire association could obtain a substantial discount on the service fees. One of the members argued that (i) cable television was a luxury not a necessity, (ii) not everyone used the service and (iii) the board lacked authority to contract for the service. He refused to pay for the service and the association sued.

Proper Authority? The association argued that it had the best interest of its residents in mind when it contracted for the bulk rate. The court, however, was more interested in whether the association had the authority to do it. The court examined the association’s governing documents and found language authorizing the board to incur expenses related to “operations, health, maintenance and safety decisions.” The justices determined that cable television did not fit into any of those four categories. Although the board acted in good faith, it acted outside the scope of its authority and the court ruled against the association. (River Park House Owners Association v. Crumley 47 A.3d 870 (Pa. App. 2012).)

Necessity? One of the appellate judges dissented. He felt that “[i]n today’s real estate world, cable television and internet services are as much of a condominium necessity as general landscaping services and, therefore, the Council acted properly in levying the cable television minimum fees.”

COMMENT. I believe the result would be the same if bulk cable agreements were litigated here–a board would need authority either from the governing documents or by a vote of the membership before contracting for the service.

BOARD PROXIES

QUESTION: CC&Rs almost always state that only a member of the association can serve on the board of directors. However, I know of situations where board members have legal counsel draw up “power of attorney” documents that give a friend or family member the right to sit on the board, attend meetings, etc. Is that allowed?

ANSWER: No, it is not allowed. Directors cannot send anyone to attend board meetings and vote in their place–power of attorney or not. The Corporations Code is quite clear on this point:

“No director may vote at any meeting by proxy.” (Corp. Code §7211(c).)

Just as Nancy Pelosi cannot send a proxy to the House of Representatives in Washington D.C. to vote in her place, a director’s duty to personally attend board meetings and vote is nondelegable, i.e., it cannot be delegated or assigned to others. Doing so is incompatible with the deliberative nature of board meetings and a director’s fiduciary duty of due diligence. (Robert’s Rules, 11th ed., pp. 428-429.) If a director cannot attend a board meeting, he/she can attend electronically.

ETHICS FEEDBACK

Ethics Pledge #1. You seem to make a difference between an ethics policy and an ethics pledge. Aren’t they the same? -Robert J.

RESPONSE: An ethics policy, which I recommend, provides guidelines for how directors, committee members and managers should deal with situations involving conflicts of interest. An ethics pledge (the subject of last week’s newsletter) takes it a step further and requires directors to either sign or verbally pledge to follow the association’s ethics policy. One large association I represent has newly elected directors raise their right hand and take an oath of office before they can be seated. That is not the norm, most associations simply adopt an ethics policy.

Ethics Pledge #2. If we adopt an ethics policy now, won’t owners think we were acting improperly in the past? -Marilyn B.

RESPONSE: Ideally, they would applaud the board for establishing standards of conduct. But you’re right, no good deed goes unpunished and some will think the worst.

Ethics Pledge #3. My view of signing an ethics pledge or even having one is that it’s ridiculous. If you’re ethical you will be just that, signing or not, and if you’re not it doesn’t matter what you sign. -Gary S.

RESPONSE: I’m sure many will agree with you. Butin my experience, some directors are “ethically challenged” not because they are bad people but because their parents didnt take time to teach them the difference between right and wrong. It used to be we could count on our schools to fill that gap but not any more–they have enough trouble teaching kids how to read and write. Adopting an ethics policy helps directors know what they can and cannot do. They readily embrace the guidelines once they know what they are.

Ethics Pledge #4. Your article on an ethics pledge sparked some controversy in our association. Our board has rejected the concept of an ethics pledge as being extraneous and non-essential. Why in the world would a board member want to sign an ethics pledge in the first place? Any disciplinary action or legal action against a board member or the board as a whole is fully set forth in the bylaws. An ethics pledge gives no additional benefit to the membership–in my opinion. -R.B.

RESPONSE: Waiting for bad things to happen and then taking legal or disciplinary action is one way of handling ethics–wait until it breaks and then fix it. I prefer to avoid the problem altogether (if possible) by establishing ethics guidelines. It’s like flossing your teeth–it is not mandatory but it is a good practice.

Ethics Pledge #5. It’s funny how a code of ethics has become a hot topic all of a sudden. Is it just me, or does the fact that somebody refuses to sign a document stating they will abide by ethical behavior a slap in the face to every single person who put them into office? -Vicki M.

RESPONSE: I’m not sure I agree. Everyone who votes for their candidate for U.S. President seems pretty happy when they see him take the oath of office. HOA boards can, but don’t need to, take an ethics pledge. At a minimum, they should adopt an ethics policy.

BALLOT FEEDBACK

Handling Ballots #1. [On the issue of sending ballots to the management office to be held for the Inspector of Elections] Perhaps the real question is who has access to ballots? In our condo complex, members drop ballots into the mail slot in the onsite office door. Yet some believe that ballot tampering occurred in two ways:

1.  An onsite manager who was defrauding the HOA was rigging elections to prevent the election of directors he knew would ask too many questions.

2.  A director who was seeking re-election and had a key to the office “disappeared” the ballots of neighbors whom he believed had voted against him. -David S.

Handling Ballots #2. There is a problem with locked ballot boxes. If an owner casts two ballots, you won’t know which one was the first (and therefore the valid) ballot. We date stamp all envelopes when they come into our office. This can’t be done with a locked ballot box unless your front desk person, if there is one, date stamps all of the envelopes before they are inserted into the box. -Sue N.

Handling Ballots #3. I think the question was about handling the ballots, not opening them. We have the president of our association, who thinks he walks on water, up for re-election to the board sorting through the ballots before the election to see who voted and who didn’t. He walked into the office and took the ballot box into another office where the accountant was working and made his list. He did this twice. I this legal? -Sue T.

RESPONSE: Only one guy ever walked on water and he didn’t get re-elected; he got a crown of thorns. If your president wants to avoid a similar fate, he needs to avoid the appearance of impropriety. No board member should be going through ballot envelopes–especially not behind closed doors.

Abstentions: I can think of another instance when a board member should abstain from voting, and that is when they have no personal knowledge of the issue upon which they are voting. The example that first comes to mind is voting to approve meeting minutes when the member did not attend the subject meeting. Is this not the proper action for a board member in that situation? -Jerry F.

RESPONSE: That is a good example of when to abstain.


Adrian J. Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” Our lawyers are friendly; if your association needs legal counsel, contact us at (800) 464-2817 or info@adamskessler.com.

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