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August 31, 2005
What Gets Ya Through the Day
Anyone who manages an HOA or practices law in this business knows that days can be trying; the job can be stressful, and anything you can do to relieve the stress is a plus. So I will share of few of my personal tips.
These are the little things:
I keep fresh flowers in the office - they are great relief for the eyes from all the paper, and if they smell good too - that's a bonus. I buy colored legal pads; yellow and white are dull and boring. I use sticky notes that come in various shapes and colors, none of the plain yellow variety. And I love the ones with sayings on them like "Don't ask me, I just work here." The funny thing is, the best I have seen are sold at my local car wash!
I use pens that light up when the point is out, in various colors. It brings a smile.
I keep a good, intriguing book on tape in the car at all times and listen to it most of the time while I am driving. I avoid talking on the phone as much as I can when in the car - I get enough of it in the office. The book takes my mind off stressful things, especially when I listen right up to parking and walking in the door of a meeting I believe could be stressful, and turning it on right after walking out of a stressful meeting. It keeps me from dwelling on what can happen or what just did. And I attend a lot of stressful meetings since I do a lot of dispute resolution and get involved in a lot of major reconstruction process meetings with Associations and their "team", presenting the "bad news" to owners.
I get up a lot and stretch in the office, and take a breath (and if the flowers smell, I take a whiff). I tackle the hardest things first thing in the morning when I am fresh, and save the best for the late afternoon when I start to fade. I run errands in my open jeep to get a breath of fresh air during the day - sometimes I just leave the office and go through the drive through Starbucks (yeah, I'm a fan), and get a nice cold drink.
Now for the hard part. Whenever I am dealing with a very difficult person, and they come in all varieties, I make it my challenge for the day to find a way to stay centered, and not react. I look for a way to make them see the good side of something, anything, work related or not. If they are making my job difficult, I look for a way to turn it around so they can get a taste of it. For example, I do many document update projects. I give an estimate for the costs based on a particular process. My process is pretty streamlined, but it can get derailed by someone who wants to wordsmith everything, change every sentence, change the order of things, etc. When I start talking about the increased costs that are generated by unnecessary rewrites and reproduction of the documents, ... well, you can imagine. So, when that happens, I just turn the electronic files over to the client and tell them they can make the changes themselves, and I will limit the time to reviewing the changes and commenting, that I will tell them if they have changed something in a manner that has legal ramifications, and I tell them the more changes they make, the more risk of having to change something back because I choose my words pretty carefully. This way, I get the project, which could otherwise become cumbersome, and the stress, caused by someone who just has too much time on their hands, off my desk.
I have other things woven into my daily practice, but I think the best and most powerful is that I love a challenge. And so I look at everything that comes in the door as if it were a challenge - to make the Board's job easier, to help the manager see the funny side, to help the board member put himself or herself in the homeowner's shoes or vice versa, to organize the pile, to catch the humor in some strange behavior, and best of all, at the end of the day to count up the number of people I helped, just because of what I know.
Give yourself a pat on the back once in a while - because others forget to do it. Most people are wrapped up in just gettin' through the day, and they come at you with "blinders" on, full steam ahead. When that happens to me - for the sake of lightheartedness -- I visualize a horse pulling an Amish buggy - have you ever seen one? That's a true case of having blinders on! It puts things in perspective.
Posted by Beth Grimm at 11:28 PM
August 29, 2005
MOMMY - WHERE DO RULES COME FROM?
Mommy -- where rules come from?
Well, honey, they have to come from somewhere. Let's see: out of some board members head maybe? The lawyer’s mouth? From some handout at a seminar? From the manager’s “stores” of information? From some other association? Maybe…
However, things tend to work a lot better if the rules come from some authority. That authority might be California law -- since this lawyer practices in California, some local regulations or zoning ordinances, but most importantly, and most often overlooked, they should come directly from authority in the association’s governing documents.
In California, as I assume is the case in other states, homeowner associations need authority in order to promulgate rules and regulations. Sometimes I am asked to review a proposed letter to an owner setting forth all of the punishment that the board wants to lay on the homeowner for some violation. Naturally, I need to know what the homeowner did, and more importantly, I need to check and see if the governing documents provide authority for the board to say that the homeowner cannot do “that”, whatever it is. I need to see if the punishment is authorized by the governing documents or the law. Sometimes I'm asked to review a set of rules and regulations to see if I can give them my “ lawyer blessing”, and I wonder -- where did these rules come from?
Most governing documents, if they are well-crafted, provide certain guidance to the Board of Directors and the association members in the form of restrictions relating to certain things, like pets, parking, architectural changes, etc. If the bylaws and/or restrictions are well-crafted, they will provide authority for the Board of Directors to consider imposing additional rules and regulations on any or all topics noted in the base governing documents. When this kind of language is used, it is usually contemplated that the Board of Directors will fill in some detail to the more broad provisions in the declaration of restrictions. (In California we generally call the restrictions CC&Rs, just for your information.)
For example, the CC&Rs might restrict parking anywhere other than assigned parking spaces. The rules might take this a step further and allow temporary parking for loading and unloading a vehicle in spaces are not otherwise assigned. The rules might allow parking for service vehicles that are providing services in the association for limited period of time. Another example would be that the CC&Rs might restrict owners by allowing for only one pet to be kept in the development. The rules and regulations might set size limits, noise or leash limits, might contain requirements relating to laws, etc.
The fact that the board expands on the CC&Rs in the rules and regulations does not mean that the rules and regulations are null and void because they do not appear in the CC&Rs.
It is a good idea to have proposed rules and regulations reviewed by the association's attorney. If you've done your job as a director or manager, it should simply be a matter (for me) of giving the “ blessing” after assuring that the authority for the specific rules and regulations is clear in the governing documents. There also some cases where the attorney might recommend that particular provisions be proposed as an amendment to the governing documents, rather than a rule, and the same may happen in the reverse if the board thinks that an amendment to the governing documents should be proposed to the membership and the attorney believes a rule will suffice. In our state, approval of the membership of rules and regulations is not required by statute, though it appears in some governing documents. However, boards of directors must circulate rules and regulations to the membership for review and comment prior to adoption. The law provides for 30-day or more comment period, and requires that owners are provided notice of the meeting at which the board will consider the rules and regulations for adoption. The law has a procedure in it which allows a group of homeowners to petition the Board of Directors asking that a vote be taken on any proposed rule or regulation that is approved by the board, that is, a vote to terminate the rule. If the board is required under this statute to put the matter to a vote -- given timing and other issues noted in the statute -- and the owners vote to terminate the rule, the board cannot consider it for proposal within the coming year. There are exceptions for rules needed to address safety issues, etc. There are also exceptions for rules and regulations that come directly out of the governing documents or the law itself. The theory behind the exceptions is that the board has no discretion or authority to change the governing documents or the law, and must sometimes act to prevent disaster, so there is no reason to seek comment and give the owners the opportunity to object to the rule or regulation before it is approved. It also expedites approval and distribution of rules and regulations that reflect the existing governing documents or the law, or that head off a problem.
These provisions are found in the David-Stirling Act at Sections 1357.100 and following.
I think that an important point to note is that it is a good thing to allow the membership time to review a proposed rule before it is adopted by the board. This way, if the owners are awake, and one notes that something the board is proposing is either preposterous, unnforceable, impossible to “police”, or patently unfair (to the membership), before the attorney has to, there may be avoidance of embarrassment and/or a cost savings.
Where did your rules and regulations come from? When was the last time they were reviewed for consistency with Association documents, law, and reasonable practices? It might be a good time to take a look and think about this.
Posted by Beth Grimm at 10:01 PM
August 26, 2005
KEEPER OF RECORDS - BEWARE!
Have you heard about AB 1098 yet? If not, go to www.sen.ca.gov and check it out under legislative bills. It is quite burdensome for boards of directors and managers. California legislators do not seem to like or trust HOA boards and managers. From anecdotal complaints flow onerous, expensive, complicated, technical and punishing laws. Of course, there are the horror stories .....
HOA owners do deserve to have access to some of the association financial records. After all, its often their life's biggest investment. But take a look at the proposed bill. The question is should all HOA owners pay the price for the fishing expedition of one overly zestful and curious owner who may want to see years of detailed records (preferring to micromanage the board from a seat across the table in the boardroom)??? Perhaps it seems I am being unfair and a little facetious - but I expect I have seen many more obnoxious cases where owners harass boards and managers beyond their patience levels and make unreasonable demands than any legislator has seen owners who have tried (using civilized reasonable methods of request) to get records (that should reasonably be available).
Anyway, AB 1098 at first required Associations to provide 6 years worth of detailed financial records, within 10 days, for review by any owner requesting them, at no cost. Industry groups including ECHO, CACM, and CAI-CLAC went up in arms. Hey - let's be reasonable here - that is more onerous than the IRS! It appears the requirements may be mutated to a more palatable 3 years of detailed financial records, allowing for redaction to prevent identity theft (since payroll records, bank records, checks, credit card statements, invoices etc. etc. etc. will probably be up for grabs), because of the hammering (or should I say - respectful commentary) of the 3 groups, but only tomorrow (actually Monday or Tuesday next week) will tell.
Stay tuned, and my best advice is (for all HOAs and management companies) to "get thee paperless" at the earliest opportunity, because otherwise costs of production of records and stress, inconvenience, and more crap will come flying your way once this bill is signed and kicks in (and yes, it will probably happen, no matter how loud anyone screams for a veto). You will probably have at least (or depending on whether you look at the glass half full or half empty) only 6-9 months to get there, so start today.
And remember - this is California only for now, but viruses can spread!!
Posted by Beth Grimm at 9:44 PM
August 24, 2005
TO SIDE OR NOT TO SIDE - THAT IS THE QUESTION
How many times have I gone to board meeting, or been called by a board member, and found that the association is facing a major painting project, and has found itself in a dilemma. (Too many to count.) I'm talking about a planned unit development, not a condominium, because the dilemma I'm talking about involves what to do about deteriorated siding when its time to paint. The common scenario is that the board is looking at a major painting project. However, the painters have indicated that they cannot paint the buildings because the siding is failing. As for another complication, the Board has reviewed the governing documents and cannot figure out whether the association is responsible for the siding replacement and repair, or the owners are responsible. I can see the can of worms pop open. Without going into a 10 page dissertation on the subject, here's the benefit of my experience:
The first thing to do is contact a knowledgeable attorney to review the governing documents and give the board an opinion as to who actually is responsible for the siding. Sometimes it is very difficult to determine that, and other times the documents are written in legalese that only an attorney can understand. Whatever the case, the board may want to consider amending the CC&Rs (which requires a vote of the owners), either to clarify responsibilities or to shift responsibilities.
In this situation, as soon as the board notifies the owners that there's a shortfall in the reserves and will likely be a special assessment for the project, the complaints begin to roll in. Many owners are unhappy and have determined that the last paint job was worthless. They do not want a repeat performance. Sometimes that is because the last paint job was laid over deteriorating siding (maybe it could not be determined by a visual inspection), and sometimes it's just because people do not realize that 15 or 20 years have gone by and the siding and paint job have outlived their life expectancy.
Any Association Board of Directors that tries to take on a major siding/painting job requiring a major assessment is at a clear disadvantage without the assistance of a bright, responsible, and knowledgeable team. The team should consist of professional management, a knowledgeable attorney, an experienced contractor with HOA and building envelope expertise, and a banker representing a bank that gives loans to homeowner associations and has a specific division serving them. Without a team, a board can struggle, and struggle, and struggle, and struggle ... and struggle some more.
Here are some options to consider:
(1) Provide whatever ballot measure(s) are necessary for the owners to turn over the responsibility for the siding and paint job to the board, so that the board can proceed to have a scope of work prepared, have the matters put out to bid, arrange for an Association loan if that is needed, and have the ballots, voting requirements, contracts, and disclosure processes reviewed by the attorney. The advantage in having the association take over the entire job is that there is economy of scale, and benefit in the team knowledge, and assurance -- hopefully -- that licensed and bonded contractors will be used that know what they are doing, and that are properly insured for working in common interest developments. The job can be done quicker and more efficiently if one entity is in charge.
(2) If the owners are responsible for siding, another option is to approach the project in a fashion that will allow the board the opportunity to communicate with the owners about the responsibilities -- of course this involves having the buildings/dwellings separately analyzed for existing problems by a knowledgeable contractor -- and then taking whatever action is allowed under the governing documents to assure that the homeowners do the maintenance needed with regard to siding before the painters are paid to come in and apply paint. This method is laced with considerable additional administrative responsibilities and these factors may increase the costs and extend the time of the project significantly.
(3) If the owners are responsible for siding, the board could go ahead and pay for the painting contractor to apply paint regardless of the siding condition, but this is certainly not recommended. In fact, this is probably what happened in the prior painting cycle and you will soon find that has exacerbated all of the problems at hand.
The Board of Directors has a very difficult job in working its way through a major painting/siding project, and going it alone is a risky and (likely) frustrating thing. A town hall meeting (where no vote is taken but owners are invited to come and be informed) with all of the team members present to provide valuable information and answer questions can take a lot of pressure off of the Board and give the owners confidence that smart people are in charge and there is hope of a very good outcome if they ante up the necessary money. In any event, a board that is entering into a major painting/siding job that requires involvement of the owners in approving voting measures such as paying a large special assessment should make sure that the officers’ and directors’ liability insurance coverage is paid up. I don't say this to scare you, but in any pragmatic approach to a problem, it is wise to consider all potential avenues of stress, and eliminate those that you can at the outset.
Posted by Beth Grimm at 1:09 PM
August 14, 2005
The Department of Fair Housing May be on the Prowl- Watch Your Rules!
Do you have rules singling out children? Rules that may discriminate against any of the protected classes? A local (California)law firm recently sent around an alert. One of the Associations represented by the firm apparently received a letter directly from the Department of Fair Housing about rules of the association. The Association was accused of discriminating against children. A rule as simple as "Children are not allowed to play in the common area" can get an Association in trouble. It suggested by this firm that the Department of Fair Housing has resorted to "surfing" the web for such rules. A simple google search for the word "children" could turn up thousands of Association sites and the offensive rules.
A few years ago, legislation was introduced by Senator John Burton, a powerful legislator, and it passed into law, that requires California Associations to remove all discriminatory language from the governing documents (which include rules). [SB 1148] Since that time, knowledgeable California attorneys have encouraged Associations to get their governing documents reviewed. Clauses or rules like that stated above may seem harmless to some Boards that are dealing with out-of-control children; however, the language can lead to discrimination claims. Clauses that prohibit renting to persons other than "single families" or that limit occupancy to a "single family", adopted because of an experience with 12 people living in a 2 bedroom condo may seem harmless but can lead to a discrimination claim. A simple change of a rule to state "There is no playing, climbing trees, bike riding or ... in the common area" is more easily defensible because it applies across the board, from children who want to dig in the dirt, to thirty-somethings who want to toss a frisbee or football in the common area. A change from "Owners are responsible for the conduct of their children" to "Each Owner is responsible for the conduct of their family members, tenants ... etc." is a simple way to get the results wanted with alternate language that will not trigger a discrimination claim. So, Boards do not have to give up on reasonable rules, they just have to think differently (try the perspective of minimizing risk of legal action against the association - which should be a part of any risk assessment analysis conducted by a Board).
An Association can be held guilty of discrimination simply for failure to remove discriminatory language. Check out http://www.californiacondoguru - for more on this -and review articles and FYIs on this topic. At the height of discussion on this - around the time the legislation was proposed and for a year or two thereafter, there were a lot of alerts sent out and many Associations did send in the documents to attorneys and receive letters for their files either blessing the documents or outlining the appoach to take with regard to potentially discriminating language. But after the initial storm of interest, the volume of review projects dropped off to nothing. Perhaps because there was no ongoing alert of this problem. Perhaps managers dropped this from the checklist of possible document issues for Associations, perhaps Boards became resistent to paying legal fees for the review and letter. Some advised that Boards could wait until an Owner or resident, or the City or County sent a letter about the language, and assumed they could clean it up before the Department of Housing got involved. The statute allows a Board 30 days to get rid of the language once notice is given.
However, times change. This year AB 394 was introduced in California because the legislator introducing it does not feel that the Burton Bill resolved the issue of eradicating discriminatory language in CC&Rs. If this bill passes, Owners will be able to strike language from CC&Rs and rerecord them, thereby superseding prior documents and rendering them null and void. Common Interest Developments are excluded but it still applies to any CC&Rs for developments that do not have an Association. Absolutely, this carries with it a number of serious problems if an Owner can disrupt the priorities established for CC&Rs, but aside from that, it illustrates the desperation of legislators to eradicate discriminatory language from CC&Rs. This recent move by the Department of Fair Housing, if it is true, may have been triggered by this renewed interest in removal of discriminatory language in CC&Rs.
Now, if it is true that the Department of Fair Housing has people "surfing the web" for potential violations, it is time to put this back on the "top burner" and keep it there, until your association has been "blessed". I realize it seems a bit self-serving for an attorney to be encouraging Boards to seek a legal "review", but truly, it is worse to be caught with your pants down! Defending a discrimination complaint is much more expensive and frustrating than taking care of business up front that needs to be taken care of. Since more and more associations are publishing rules and regulations on the web for all to see (which by the way I am not in favor of), there is much more exposure to liability for an innocent oversight. And be advised that a complaint might come from an owner or tenant within the development, even if the Fair Housing Department does not find anything interesting on the web. And if your Association receives a complaint or request FROM ANYONE that suggests there is discriminatory language in any of the Association governing documents, get help from a knowledgeable CID attorney (don't go to your family law or estate attorney for this, or even a real estate attorney with no specific CID credentials!)immediately! This is serious business!!
Get thee to the website and check it out. If you read my blogs, you know I believe in preventive law. If you do not take measures to avoid a discrimination claim, and the Association does receive a Fair Housing Complaint letter, you will have to pay not only for a full review, and advice of what to correct, but also to defend and satisfy the Fair Housing Department requirements, which can be quite severe.
Posted by Beth Grimm at 10:39 AM