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April 28, 2006
ELECTIONS RULES - IS A RUSH TO THE ALTER A GOOD IDEA?
Elections Reform - the bane of HOAs in California.
Many attorneys are telling associations that they need to approve Election Rules before July 1, 2006, or the process will be much more difficult. I felt there was some urgency myself, so associations could be prepared on time. Some people are getting the impression, justified or not, that if an association waits until after July 1 to approve its Election Rules, that it will require a vote of the owners. That is not true, unless the governing documents for the association require that the board get approval of the owners before imposing any rules.
The fact of the matter is that if an association Board of Directors approves the Rules prior to July 1, 2006, the rules do not technically, under the law, need to be circulated to the owners before approval. They may not anyway, if they are sufficiently reflective of the new law. As you may or may not know, current California law (Civil Code Section 1357.100 and following) requires an association that is making new operating Rules, or changing existing operating rules, (the subject matter is defined in the laws) to circulate the proposed rules to the membership prior to approval by the board, if they contain any provisions that are not provided elsewhere in California law or the governing documents of the Association. There is a 30-day comment period in this process, allowing the owners to provide feedback to the board about the proposed rules. The feedback does not prevent the board from approving the rules. The process also allows owners, through a petition process, to seek termination of any of the rules by asking the Board of Directors to put a particular rule to a vote (asking for termination of it) by the members. Some attorneys, and some board members and managers, believe that it is better for their association to get these rules approved before the July 1 day so that the process on rule approval found in Civil Code section 1357.100 does not apply.
There is merit to this argument in some cases. If the Board of Directors has an election relating to assessments, directors for the board, amendments to governing documents, or transfer of common area property in July or August, this would be one reason to rush the Election Rules process. If an association believes that it may receive unreasonable resistance to the rules based on past experience with one or more owners, then this might be another case where the board would be justified in proceeding prior to July 1, 2006. Certainly, it simplifies things for a Board of Directors to approve rules without sending them out to the membership for the comment period, so this might be a reason to push for approval before July 1, 2006. And if the Association is very large, cost can be a concern. However, (see below), Boards may not be able to avoid this circulation process if they jump the gun and the law changes sufficiently to warrant circulation of modified rules and processes.
Keep in mind that there is some potential benefit to sending the rules to the membership prior to approval by the board and to allow the members to comment. This would be an opportunity for the board to initiate the process should open with a passage saying that California law requires associations to adopt Election Rules that will result in a secret ballot through the mail process, so owners will be aware that the new process is required by law. The rules should align closely enough to SB 61 that if any owner wishes to pull the statute, they will see that the board is making a good-faith effort to comply with California law. If in the course of the comment period owners come “unglued”, this will be up the opportunity to educate them further, before you get into the middle of a voting process and have to deal with criticism of the process. This should make the elections go more smoothly. If any owners petition the board to reverse a rule and that rule is required by the statute, that would be grounds to refuse to vote. The owners cannot change the law. Circulating the rules before approval may add another element to the “integrity” of the process if a Board is challenged in an election. The new law invites challenges because of its lack of clarity and failure to integrate the processes with most existing governing document provisions and other laws regulating corporations (which many associations are). Although it attempts to resolve conflicts with other laws (of which there are many) by its own terms, it does not do so seamlessly. Any hearing officer considering the challenges to an association's process may be swayed favorably by an Association that circulated the rules prior to adoption, and considered homeowner feedback important. If no owners comment, that bolsters the Association’s argument of satisfying all possible “due process” aspects. The same process could be accomplished by sending the rules to owners after approval by the board but that would be a “one step” initiation process. Some attorneys are not even recommending that. If the rules are sent out prior to adoption by the Board for the “comment” period and then again after they are approved by the board, this would be a “two-step” initiation process, and it may actually help with owner relations over these new processes. It may bolster trust and better prepare owners.
This is a major change for many associations. I think the “two-step” process is warranted. However, it is not required.
There is a very valid reason to defer the final draft of the Election Rules until after July 1, 2006. The cleanup legislation that is proposed has some substantial changes that could require any set of Election Rules that is approved before July 1, 2006, to have changes made. Practitioners who have already written and circulated rules to clients have already had to notify clients that changes will or may be needed. Any changes that come into play may have to be circulated to the members, and this will trigger a two-step initiation process anyway. SB 1560 is still unsettled. Various industry groups are vying for additional changes to the elections law. The legislator who authored the original elections reform law, and introduced the cleanup bill, has threatened to pull the bill if the industry groups cannot agree on changes. Thus, the final rendition of the elections reform law is as yet unsettled.
If you are an association that has a meeting in June, and it might be necessary to schedule an adjourned meeting in July because of a lowered quorum in the bylaws, you might consider providing notice both meetings at the same time, the first and the tentative second meeting, so that the scheduling of both well fall before July 1. If the board has a meeting in June and it is not possible to schedule a tentative second meeting in June, or has a voting measure on one of the qualifying elections, then those associations will require independent legal advice as to how to proceed since the voting period falls during the change in elections processes. In any case, you need to seek legal advice on this as this article does not constitute legal advice.
Right now, the four elections that are affected by the new law are elections on assessments (that exceed legal limit increases), amendment of governing documents, choosing board members, and transfer of common area property. If you do not have any of these elections falling until September or after, then my suggestion would be to wait until after July 1 or until SB 1560 is finalized one way or the other, to see if and what the final amendments that have been proposed for cleanup are signed into law. That way, you could have better chance of having Election Rules that do not require amendments because of changes in the law. However, waiting will require that the Board circulate the rules to the owners for the 30-day comment period before approving them. I do not think this is a disadvantage that is outweighed by the advantages to be gained, but you might.
SB 1560 is proposed as urgency legislation, so once a decision is made on it by the author, given the proposals for amendments, it should fly through the Legislature and be signed by the governor right away, giving it the possibility of being settled by July 1. Associations should know that they can choose to defer this process until the law is settled if they wish, unless they have a crossover election in June that might spill over into July, or have an election in July or August. I feel that the communications of attorneys in this state, frustrated with the elections reform problems, and anxious to provide “quick fix” solutions, coupled with manager and board misinterpretation of attorney comments, have created a “sky is falling in” misimpression of what will happen if boards wait until after July 1 to approve Election Rules. It is not the end of the world.
For more on the Elections Reform, check out earlier blogs, and also visit the Guru at http://www.californiacondoguru.com and click on the box on the first page on "Elections per SB 61".
Posted by Beth Grimm at 11:52 AM
April 27, 2006
Surviving Each Other: the Art of Communication
Communication is a lost art in some HOAs. The majority of people just are lacking in people skills. They might be in a hurry, frustrated, impatient, uneducated, or harried. Volunteer board members tend to get more criticism than praise, and often find themselves spending much more time than anticipated on association business. Then along comes a curious, tenacious and sometimes downright abusive or offensive owner who makes what seem to be unreasonable demands. Sometimes the shoe is on the other foot and an owner suffers at the hands of an overly egotistical, power hungry, or just plain tired board member.
The title says it all, communication is an art form. When you mention “communication”, the name has a warm touchy-feely connotation. Seems like there should be a “community” of some kind involved. Some form of fellowship, something in common. Common possession or enjoyment of something, such as any use of common facilities; or common obligations, rights, and privileges, common interests, living under the same regulations, some kind of society, common character, similarity and likeness.
Sounds like an ideal situation, doesn't it? However, and if you read and believe everything that is said in the newspapers, you would think homeowner associations Boards are secret societies, police states, and HOAs are nasty places to live. Why? Much of what is recorded in the newspaper (selectively reported to glamorize or "make it a "horrible-sounding" story) revolves around the emotional side of living in an HOA. People have emotions, and act out and do crazy, immature and strange things. Homeowners who move into an HOA with a “my-home-is-my-castle” mentality are usually not nice about the way they approach things. Oftentimes, they do things without regard for the rules and regulations, and often because they have not read them nor do they understand them, nor do they believe in the board is cable of enforcing them. Then, when the board is confronted by these kinds of people, they react with a “like-kind” attitude. Defiance begets negativity. Anger begets defensiveness. Attacks invite either a retreat or counter attack. What you have probably found, and what I have found, is that one of the biggest problems that boards have with regard to the homeowners is the inability to communicate “artfully”. That is where people on either side of the table can shine. Teaching, directly or by setting an example, better communication skills may turn out to be a most important asset. It may involve assisting the board in proper communications with the owners, reigning in outspoken directors, schmoozing vendors in negotiations on contracts, organizing owners to challenge the Board if you believe that is necessary, soothing ruffled feathers between neighbors who are fighting, breaking bad news to owners in the face of some large rehabilitation or construction project, or helping to write rules or regulations with a “positive flavor” that will invite compliance, rather than evoke criticism and defiance. It may just be communicating your needs to the Board, in a way that will not invite a closed, negative response.
What is communication? According to Websters’, one definition is" to have or hold intercourse or interchange of thoughts; to give, or give and receive, information, signals or messages in any way, as by talk, gestures, writing, etc.” Now we have a “sexy” topic, and I hope, your attention.
I find, in the course of my daily work with boards and owners, vendors and professionals alike, a significant void of people skills. Many of the people that I come in to contact with every day are busy, hurried, anxious and short of time and temper. Actually, there are days I find myself in that position. So its time to take pause, and think...
On my website you will find an article by this same name, containing tips I have picked up along the way that might help you. Visit the Guru http://www.californiacondoguru.com, and click on "What's New".
Posted by Beth Grimm at 10:34 PM
April 9, 2006
Slab Leaks - A "Muddy-Gray Area" To Be Sure
A reader wrote this to me: "We recently had a slab leak detected and repair in our condo unit and we thought this would be something that te association would be responsible for financially. The CC&R's and ByLaws do not mention anything specific to that other than the HOA is responsible for exterior maintenance, but one of the board members found a letter from 20 years ago where it states that at an annual meeting back then the members voted to make pumbling leaks under the slab a responsibility of the individual homeowner. We have purchased this unit recently and did not receive this document with our HOA documentation package. Other members also confirmed that they have never seen this letter as well. My question is: under common practice, are slab leaks responsibility of homeowners or HOA? And are letters like this valid or do they have to be amended to the CC&R's and Bylaws?"
At least one answer is easy to give. In California, and perhaps elsewhere but I am only speaking for California, an amendment to the CC&Rs is not effective until it is recorded with the County where the Association is located. A bylaws amendment is effective when it is approved by the members. Normally, an amendment that affects maintenance would not be made to the Bylaws but it has been known to be done. The CC&Rs generally contain the mainenance responsibilities though. That does not mean that an Association is hamstrung on identifying individual and HOA responsibilities if the documents contain no detail. With good legal assistance, a Board can approve a Matrix or list of responbilities to add clarification in situations where the documents do not contain much detail. A fair amount of detail can be provided by a review of the definitions related to ownership, and the general responsibilities as stated. Any policy related to maintenance that is adopted to provide more detail must not be in conflict with the governing documents, and the authority to adopt the policy or rules must be present, but the Board is not usually limited to restating the generalities in the document in defining maintenance responsibilities. Another factor is California law. In Civil Code Section 1364, the law says in a condo, the HOA is responsible for maintaining the Common Area except for exclusive use common area, unless the Declaration (CC&Rs) otherwise provides, and that in a PD (planned development), the Owner is responsible to mainain their Lot unless the Declaration (CC&Rs )otherwise provides. Taken together, a good attorney can come up with a failry detailed interpretation of responsibilities. It is not very easy for a board member or manager to do it.
However, here is where it gets more complicated. The words "exclusive use common area" have legal significance. Someone might argue that the slab in any given condo is exclusive use common area. However, that argument is weakened considerably if the CC&Rs say the plumbing pipes that are in the Common Area are the HOA's responsibility.
So I would have to say that for a slab leak, in a condo, unless the CC&Rs say something different, it most likely would be the responsibility of the Association to fix a slab leak because the slab is part of the building, and the buildings are usually owned by all unit owners as tenants in common, and thus, all of the building components are characterized as Common Area. And given that Owners generally own only the "airspace" from the walls inward in a condo, this strenghtens the argument that the HOA would be responsible for the plumbing pipes and the slab repairs. The Association normally maintains the Common Area. It is different in a situation where the Owners own "a Lot " instead of airspace. Then the answer could be just the opposite, unless the pipes are common pipes and serve more than one Lot. However, there are all kinds of machinations in documents and this is not to be construed as legal advice, but simply as general information about the analysis of such a question.
Other factors that confuse matters: even if the HOA is responsible to repair the pipes and the slab, owners generally think the HOA is responsible to repair everything in their Unit as well, like the carpetting, walls, baseboards, couches, personal items, etc. How far the Association responsibility extends depends again on the document language, any policies that are valid, and to add two other elements, insurance responsibility and negligence considerations. I have to stop here - there is just so much to the inquiry and resolving a question like the above.
The amendment the above reader is talking about does not sound like a bona fide amendment to the CC&Rs or Bylaws, even though it may qualify as a policy adopted by the Owners. If it was intended as an amendment to the CC&Rs, a certification of it should have been recorded. The question as to what can be done about it now would best be referred to an attorney for advice. The point is amendments and interpretations can clarify and/or change things and then it becomes a question as to what the position is on those - i.e., whether the written "whatever it is" is legal and controls.
There are a number of articles and FYIs found on the condoguru website
Take this scenario: Tenant notices the carpet in the hall is a bit damp but supposes the cat missed the litter box. Tenant does not want to tell Owner as there might be repercussions, so mops the carpet up to clean up the "whatever it is." However, the dampness spreads and pretty soon it shows on the wall between the hall and living room. The new wood floor in the living room starts to buckle and the wall board shows dampness up 6-8 inches.
What happens? The HOA comes in and tears up a portion of the wood floor, and the carpet, and cuts out a portion of the wall and finds not only a slab leak but mold. It fixes the pipe and the slab, and then what?
The Owner demands the HOA pay for the repairs to the flooring, for new carpet (throughout the Unit where carpetting still exists) because the hall carpet cannot be matched, repairs to the wall, the outlets, the bookcases against the wall that got some dampness, the wallpaper that is coming up (for the whole room as the wallpaper cannot be matched), and the relocation of the tenant, plus mold remediation, including having everything in the Unit cleaned.
Everyone expects the Association will bear the entire brunt, even in a case like this where failure to report the leak exacerbated the entire situation and caused this situation to go from a $2500 fix to a $35,000 fix (or more).
This is when the fingers start pointing, and the documents including the association governing documents, the insurance policy, and historical records are pulled out, dredged up and dusted off. And it is long before this point that the question of a slab leak loses its simplicity and gets into that "sticky, moldy gray area", and the lawyers are called in to make something meaninful out of the muddy (literally) mess. That is when the matter can go from a $35,000 expense to a $100,000 expense (or more!).
See how it works?
It is for this reason that attorneys like myself, who would like to, to the extent possible, head off these kind of disputes, suggest beefed up language about responsibility for failure to report leaks, shared responsibility for repairs and protection for the Association against having to repair expensive upgrades that are damaged by leaks that are sometimes very predictable (such as in buildings with old pipes, old roofs, faulty construction, etc.) What Owners want is to be made whole when there is an incident like this. What Associations want is to be told when there is any sign of a leak in something that might lead to bigger problems, like the roof, a window, or a slab. Even if the HOA is not responsible for the slab or the pipe or the leak, it should when it finds out about such a problem do what it can to document the situation, the cause, and the repairs. Why? Because it is incumbent on an HOA, even in a Planned Development, to take action to require Owners to fix their own Lots (incuding the home that is attached to a neighbor's home). Water leaks cannot be ignored. The question is, when all is said and done, who pays? I cannot give a pat answer to this, but perhaps after reading this, you are a little wiser about what NOT to do, which is ignore, finger point, and refuse to do your part in getting things fixed. People can argue about the costs till doomsday, but it makes more sense to be arguing about $5000 or less, rather than $100,000 or more.
Go visit the Guru for more http://californiacondoguru.com.
Posted by Beth Grimm at 6:31 PM
April 7, 2006
Regulating Human Behavior - What Can You Do?
A nasty person often remains a nasty person. A crazy often remains a crazy. Belligerance is seldom curable. Selfish behavior is common in self-centered people. Stupidity, although it can be cured, takes a willing idiot.
Homeowner Association Boards are somehow expected to be able to fix everything. They are expected to act on everything that an owner wants them to act upon. They are asked to solve problems that derive from human behavior, something no one really has much control over. Of course, punishment can be meted out, rules can be adopted, and those kind of deterrents work on reasonable people, but what about the rest.
I wish I could offer a viable solution that could be applied to all difficult people situations. I have talked about noise issues, irresponsibility in reporting leaks, confrontations by idiots and how to respond, what might be expected of boards if one owner is harrasing another, and all kinds of situations involving people that are probably not going to change.
So what can a board do? Get help. Its all about pushing the right "buttons", and sometimes, though seldom, there is no viable "button", but at least a Board may get points for trying. Don't try to fix a person; try what is needed to give them incentive to change their behavior.
A few examples:
If a person is stupid, or acting stupid, educate them, in the clearest way possible. If they do not believe you, find something that comes from another source, a trusted or respected source. Perhaps a book, an article, a blog, a friend, judge, neighbor, or parent, or child (such as in an elderly parent suffering from various mental deficiencies).
If a person is harassing or threatening another person, get help from a knowledgeable source: an attorney or a police officer. These people can help lead you to resources you can point out to the owner that is the victim - indivuduals can file with the courts without an attorney for restraining orders to protect themselves. The police can sometimes intervene. Neighborhood watch officers can help groups of people cope with and beat crime in the neighborhood.
If one owner is doing something in their unit that completely annoys the neighbor, and the neighbor is retaliating, get them the info on the local conflict resolutoon panel. Maybe threaten association action, depending on the facts or situation, but realize at what point it is about conduct that is equally bad that is driving the disputes and the activities.
If a person is an idiot, read my earlier blog.
All I can tell you is that I have helped many associations and many owners solve many problems, but still have to say that not every approach works in every situation. I am a strong advocate of Association policies so that consistency is the order of the day, and Board members have road maps to go by. I have often opined that it is harder for an owner to argue with a piece of paper than the Board President (hence, the value of policies), However, when you are dealing with a person who has no regard for rules, reasonable behavior, or other people, sometimes you just have to punt. But don't go blind with it. Get help from someone skilled in dealing with the challenges.Sometimes board members or managers have had difficult people training. If there is no one in your association that has any specialized training then get help early, before the person who is causing you to lose sleep at night does too much damage, or frustrates the board into threatening resignations en masse. For every problem, there is a solution (this is my favorite phrase). Sometimes it just takes the right combination of forces and awhile to figure it out.
Posted by Beth Grimm at 10:43 PM
Megans Law List - A Blessing or a Curse?
I use this phrase alot about things relating to Homeowner Association issues - is it a blessing or a curse? This is a perfect example. Boards in homeowner associations can be found to have a duty to react when the Directors become aware of information that there is a dangerous situation in or threat to the the neighborhood. Crime or attacks in the parking lot? Better improve the lighting, trim the shrubs, and possibly consider some security. Trip and fall hazard in the sidewalks because of settling? Better shave them down, paint warning strips, repair the concrete, or cordon off the area. Serious dry rot or termite damage in the stairways or weakening supports under the decks, better have the areas inspected, assessed for safety, and taped off if there is a risk of failure until repairs can be made. One owner threatening or harassing another? There are some decisions around the country indicating that the Board might be expected to intervene, address the conduct, possibly issue a warning, maybe more. In California, one board was held liable because an owner was attacked and raped. Because of reports of criminal activity in the neighborhood that had been rumored to occur, and the owner's resulting fears, the owner had tried to get the board to approve extra lighting, to hang extra lighting, and when she could not get approval, and put up her own lights, the Board made her take them down. (Francis T. vs. Village Green). Thereafter she was attacked and raped, and she sued.
But when a resident brings the board news of a sex offender in the neighborhood, or worse yet, news that a board member or board candidate is on the list, what is the Board to do? The normal reaction of the one who brings the news, and many boards, is get that warning out there. But what is the Board going to say? That the convicted offender is a neighborhood threat? What if the person happens to be a school teacher who has a "relationship" with a student who appeared older than 16? Or a celebrity stalker did something that got them on the list. Is that person a threat to the neighborhood little ones? Is it up to the Board to find out what the Penal Code section of the offense means and what the past commission of the crime means in terms of risk, given the makeup of the neighborhood? I do not consider that to be within the realm of the board's obligation. Assessing criminal behavior and risk should stay in the hands of the experts. Certainly, parents will take extra precautions if they know a child molester is in the neighborhood, but any individual can check the list.The Boards have enough responsibility without being put in charge of this kind of matter.
Even the first time I was asked to opine on this issue, a few years ago, something did not feel right. Jumping to conclusions and action raised all kinds of questions. How to react, what to say, how to distribute any notice, how residents would react, what it might mean to someone who was trying to sell their home, what it might mean to the person providing the home to the person on the list, either as a family member or a landlord, and what the ramifications to the Board or Association might be if there was some kind of disastrous reaction from the residents.
So, I talked to police officers, public defenders (of whom I happen to have 3 in my family), and colleagues. I learned from the police that if listed offenders are harrassed, at some point the list might be withdrawn, and so that was not advisable. They could disseminate some information but had to walk a fine line and advised the same for Associations and residents. I went onto the web checked the list to see what and how that worked. Until I went to check the list, I was not aware that there stated warnings about the ramifications for misuse of the list right there as you navigate your way in. And then last year, the stakes were raised. The punishment for misuse of the information (such as harrassment) was increased and the law was tightened. Why? Complaints about misuse of the information perhaps?
Whatever the reasons, Association Boards have to be very careful about what they do with information provided by the lists identifying a sex offender's presence in the neighborhood. For more, visit the guru and read the article posted back in January, located at the californiacondoguru website http://californiacondoguru.com Click on "What's New" and check out the article "Caught Between a Rock and a Hard Place."
The same advice applies to any information that comes to a board indicating a possible threat or hazard in or to the neighborhood. Address it pragmatically. Do the research or investigation needed, and move forward thoughtfully and with the right kind of advice.
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Posted by Beth Grimm at 9:30 PM