March 15, 2010
How Far Back Can An Association Go To Collect Assessments?
Here is a question I received about assessments:
"My condo association is threatening to come after me for assessments dating back 3 years. I left 3 years ago. The lender still has not done anything. Can they come after me?
The answer would be yes, if they are entitled to the assessments. The HOA or Condo Association can go back 4 years. Beyond that it would run into a statute of limitations problem (in California) as the SOL on contract breaches is 4 years, and the CC&Rs are considered a contract.
If you want to know what happens if an owner "walks away" from a condo or townhouse association, see www.condolawguru.com.
Posted by Beth Grimm at 10:17 PM
March 10, 2010
Recording Board Votes - Is It Required?
Owners often want to know how board members vote on business matters. One way to find out is to go to the board meetings. Another may be to review minutes. Here is a question related to this subject:
"When votes are recorded in regular board meeting minutes, should those votes show each director's vote (yea, nea, or abstain)?"
My answer: Some associations do record this, some don't. I do not know what Roberts Rules say. There is nothing in the Davis Stirling Act or Corporations Code that I know of requiring anything other than whether the measure proposed passed or failed. Look for the answer about Roberts Rules on www.parli.com. You can ask questions there too.
Posted by Beth Grimm at 10:16 PM
March 5, 2010
Can Owners Have Information On Other's Loan Questionnaires in an HOA or Condo?
I have been writing alot about loan issues, FHA certifications, etc. Here is an interesting question from a frustrated owner related to financing issues. An owner attempted to sell his unit but the buyer could not get financing for purchase of the condo unit. His/her lender did not approve the loan and apparently the problem was tied to the lender's questionnaire. He knew that other units had sold and so wanted to know what lenders were approving sales and how their questionnaires differed. This left the owner in a dilemma and he came to me with this question:
"So my question is this. As a homeowner am I entitled to see the HOA certifications that the association filled out for the properties that were sold. I am hoping to find out the banks that are allowing loans so I can advise my buyers to try and get qualified for them."
My answer is this: There is no legal basis or support for this request so the HOA or condo association would probably say no. There are privacy issues involved.
But in California a member can legally ask for a membership list - names and addresses of other owners - upon stating a valid purpose. Wanting to communicate with other owners is a valid purpose. Armed with the names of owners and addresses of properties that sold recently an owner could communicate with them. However, one could also get the new owners' names by calling the local assessor's office and giving the address so why press the association for the list of all owners and take a chance on getting into a row over this.
And if contacting the new owners, tread lightly, the new owners might be turned off to a communication asking who their lender is.
Posted by Beth Grimm at 9:18 PM
March 1, 2010
ELECTIONS IN HOAS AND CONDOS - Can the Board Endorse Candidates?
Here are some blog questions I received from a reader about board endorsements in candidates for election. And I added one question that came from a client. For each, the question is in quotes and bold and my answer follows:
"Is it ethical for current board members to endorse an incumbent going door to door and posting flyers on behalf of the incumbent? There are several candidates running for two positions."
In California, I believe that if board members go door to door to endorse an incumbent, it could present a legal issue IF THE BOARD MEMBERS are representing that the incumbent is supported by the association or the "board". If the board members are telling members that they as fellow homeowners support the candidate, I do not belive that is a problem. This premise could be argued pro and con. California law prohibits boards from expending association resources to promote candidates and requires that boards give all candidates equal access to resources if any are offered to any candidate. So it is best to live within these parameters to avoid issues with HOA and CONDO Association elections in California.
However, I will point out that this question about going door to door is really not using association resources because no cost is involved (I am assuming). Board members are normally unpaid volunteers - so their time is their own. However, if they are passing out flyers paid for by the association supporting only certain candidates, that would be crossing the line, for sure.
"Is it proper for a board president to send out a letter to all the homeowners discrediting a candidate? The association paid for the mailing."
This could very well be a violation of California law since the law requires "equal access" and equal treatment by the association of all candidates. Naturally, one would have to see the publication and know the facts before passing judgment. Why? For example: notifying owners that a candidate is not qualified to run under the qualifications in the bylaws could be construed as discrediting a candidate (and in my view would probably not be necessary if the election processes are handled correctly), but might be legitimate under certain circumstances. Outright "dissing" of candidates by the Board President using Association resources would be a problem.
"Is it proper for the board to endorse a slate of candidates presented by the HOA or Condo Association's nominating committee?"
This is a difficult question and I believe great minds might disagree on this. My take is that the Board could announce a slate put together by the nominations committee after its review of candidates while announcing all candidates, but if the Board crosses a line and endorses these candidates over others that are qualified to run, it might taint the election and leave it open to challenge.
Thus, I would not advise making any "board endorsements" unless it is done individually by board members representing their views as an owner, and not using association resources.
Posted by Beth Grimm at 8:24 PM
February 26, 2010
FHA Certification for Condos is Harder Now - More Expense, More Time - Is It Worth It?
At the end of this blog are excerpts from two recent news stories published on CNN's website. One article suggests that there may be more federal funds pumped into the effort of saving owners from foreclosure and stemming the increases in foreclosed homes. And one says that Fannie Mae (FNMA) needs funds. (See excerpt below.) And the HUD website explains that the FHA funds may run out by mid 2011.
Not to be critical of doling out money to help homeowners, but the question eventually has to be: how much more money can be pumped into the system before the faucet runs dry? And, how much longer can the owners hang on who are paying their mortgage as the home prices are driven down by short sales, bank owned property auctions, and the failing economy?
This is especially pertinent to condo associations because FHA has made some changes to the certifiability of condo units for FHA funded loans. FHA has done away with spot certifications and is requiring project certification for Condo units to qualify for consideration (note that certification does not guarantee a loan but does allow applications on projects that are certified). If the FHA loans dry up for condo associations for lack of available funding (or other properties, for that matter), certification will no longer be meaningful.
For the summary of changes and questions the recent FHA changes raise, visit the E-News archives at www.californiacondoguru.com and read the latest E-News.
To see what is happening in detail with the FHA certification and also with the issues related to future funding, visit www.HUD.gov.
Here is just an excerpt from the article touting the possibility of more funding to be offered to assist owners with regard to currently-owned property:
"Housing help for unemployed, underwater borrowers
http://money.cnn.com/2010/02/19/real_estate/housing_help_unemployed/index.htm
By Tami Luhby, senior writerFebruary 19, 2010: 7:36 AM ET
NEW YORK (CNNMoney.com) -- Under pressure to do more for troubled homeowners, President Obama is expected to announce on Friday a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis.
The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.
Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
Obama is scheduled to unveil the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation's second-highest unemployment rate at 13%.
The president will be joined by Senate Majority Leader Harry Reid, D-Nev., who is facing a tough relection campaign.
The funds will be allocated based on a formula that takes into account home price declines and unemployment. The agencies' programs must be approved by the Treasury Department.
The move is the administration's latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.
The year-old initiative, which lowers qualified borrowers' monthly payments to no more than 31% of pre-tax income, has placed more than one million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.
..."
*********
And this article appears on the site and is pertinent as well:
"Fannie to U.S.: We need another $15.3 billion
By Tami Luhby, senior writer February 26, 2010: 6:35 PM ET
NEW YORK (CNNMoney.com) -- Battered by the housing crisis, mortgage finance company Fannie Mae said Friday that it needs another $15.3 billion in bailout money from the federal government.
Fannie Mae (FNM, Fortune 500), which is controlled by the government, reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department. This is down from $25.2 billion a year earlier and $19.8 billion in the third quarter.
..."
Perhaps you can see where this is going. Is the cost of seeking project certification in Condo associations justifiable?
There are those that say: "Without Question." And those that "Question."
Posted by Beth Grimm at 10:44 PM
February 22, 2010
May an HOA or Condo Board Turn off the Water or the "Juice" for Unpaid Assessments?
Many associations are having a difficult time collecting assessments these days. They are looking for "incentives" to get people to pay. Here is an example of a common question:
"I am in a 10 unit complex. There is one DWP meter for the complex paid by the HOA. [Approximately 1/3] of our annual budget goes to water. If an owner fails to pay dues can the HOA shut off water to that unit? Would our bylaws need to cover this?"
First of all I would say emphatically that an HOA or Condo Association could get into trouble turning off anyone's water if there was no provision in the governing documents (CC&Rs for Condos or HOAs) allowing it.
Secondly, I would not advise amending the documents (even with owner approval) to allow for disconnection of water, electricity or utilities for non-payment of assessments, unless we were talking about a separate corporation in the case of water that acts as a water company.
Third, the potential for trouble if the water, gas or electricity is turned off seems to me to greater than the potential benefit. Without electricity or gas for heat, cooking, etc. accidents can happen (candle use, use of gas and propane stoves indoors, failure of oxygen machines, battery pack wheelchairs and the like used by those who need it) and worse things can happen such as attempts by residents to tap into the services illegally causing damage. Without water toilets don't work, people cannot wash, children go thirsty.
You may get different advice from other attorneys, but turning off basic services is not a remedy I would recommend. And when there is only one system without shutoffs, I do not even know how it would be accomplished realistically.
Posted by Beth Grimm at 9:14 PM
Are HOA or CONDO Association Bylaws Normally Recorded?
Here is a question about Bylaws:
"I am wondering if By Laws have to be recorded? Is it standard that they should be? And, what procedure is used to change By Laws and do they have to be approved/reviewed by the Homeowners prior to adoption/recording?"
Bylaws generally are not recorded (in California) but sometimes there is a reason to do it. For example, if the original Bylaws were recorded, then any amendments should be so that the last record standing is not incorrect. In the "really old days" it seems some Bylaws were recorded. I come across that situation occasionally. And also, I heard an attorney say the other day that he was considering advising a board to propose something for an amendment to the Bylaws and record it as a recorded restriction because the development consisted of a cooperative with no CC&Rs.
Homeowner association Bylaws amendments would normally have to be approved by members and the Bylaws would say that. There are some amendments that can be made by Boards if the Bylaws say that, but the Corporations Code limits what those changes can be.
Posted by Beth Grimm at 9:02 PM
February 18, 2010
Who is the #1 HOA Attorney in California?
This I cannot leave alone. A potential client called today and asked me some questions about my services. In the course of that, she said:
"There's an attorney on the internet who advertises that they are the #1 best HOA attorney. What do you think about that? "
My knee jerk reaction was: "I think any attorney could say that, but I would have to wonder about anyone who would. Wouldn't you?"
After some reflection I wondered about what criteria a "someone" who claimed to be #1 would be using to make that claim? Biggest judgments? Most Clients? Biggest bank account? Best litigator? Best transactional?
I'd ask about criteria if I was considering going to someone who would make a bold claim like that. I don't know of a study or poll or measuring stick that points to any one attorney anywhere as the best, let alone in California. Personally, I think any measuring stick for "the best" would have to include honesty and integrity, which to me seems lacking when someone engages in "puffery" like this. Have you seen the TV commercial defining it?
And one more thing. Happy clients are a good thing, and I have had clients who tell me they think I walk on water .... but I would never say that in an advertisement!
Posted by Beth Grimm at 1:38 PM
HOA - Condo Board Voting by Email - What Are the Chances?
Here is a recent question posed to me via email about board voting:
"When the Board votes by e-mail, is it required that ALL Board members cast a vote or is it acceptable to consider the matter approved if the majority of the Board voted to approve while some Board members did not cast a vote?"
Easy answer in California, and probably elsewhere:
It's not okay to vote by email.
And, furthermore, it's not appropriate to vote by a telephone "tree".
And surprise: It's not okay for any board member to vote on board actions via proxy either!
That is not to say that internet meetings or telephone meetings are out of the question. But in California, if an association documents do not prevent it, corporate boards (most HOAs and Condo Associations are corporations in California) can meet through modern means such as the internet or telephone conferencing. It is important to know the rules, and also critical to make arrangements so owners can "attend" and exercise their rights to address the board - at least as to all required open board meetings.
And finally, although "written unanimous consent options" are somewhat commonly available, the option should be used sparingly, and the word "unanimous" is key.
Posted by Beth Grimm at 10:58 AM
