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July 31, 2007
Solar Energy - What Are The Trade-Offs? What Do You Need to Know?
In today’s world, owners are, by their own initiative, seeking to be environmentally conscious. Outside clothes drying is coming back strong (we already talked about this in a separate blog). Solar installations are in vogue. One can place anything on their own home or in their own yard, but be careful if you are in a development where architectural approval is needed for changes to the exteriors of the buildings or erection of things on the roof or common area or other areas. Why? Because you may go out and spend a lot of money for something you cannot install.
This is what California law says on the subject, and some commentary:
If you purchase a solar system without checking first with the HOA Board and getting approval of a system and placement of it, the installer will probably recommend a roof system. The owner in a condo or townhouse homeowner’s association does not own nor maintain the roof, so the association has an interest on what might be placed on it. So, the Association has a say in what might be installed (or not). Some HOA boards have been forward-thinking and have a policy on solar installations explaining what is acceptable. Those that do head off many disagreements. Others do not even know what options there are and so owners go ahead and do whatever they want, driving the board crazy.
It’s like having a satellite dish policy. If the owners are told what is acceptable, when they shop, they will likely have that acceptable installation with them and the solar (or satellite dish) salesperson will not be able to tell them they should purchase something else (usually more expensive). People are mostly like sheep - really! - The majority of people tend to follow, not lead, and the average person does not want to cause trouble if they can avoid it, so giving written guidance to owners tends to set boundaries that are accepted.
Sometimes, owners just do not like the fact that the Board has any say at all so they do not ask for approval. Some owners get themselves into a dilemma by signing a contract for an expensive system and of course, that results in more incentive to fight for it.
The limitations that association may impose on solar systems were found to be reasonable by the legislature when Civil Code Sections 714 and 714.1 were approved. The law won't allow an Association to prevent any solar installations, but does allow associations certain controls. One might ask why should this be? The answer is so that aesthetics and maintenance issues that may arise may be addressed (such as allowing the same or similar systems so that aesthetics are consistent). Certain systems may allow for reasonable maintenance of the roof and removal of the systems when roofs are replaced. And of course, if the roofs are tile roofs, walking on them and installing systems can break tiles, one has to know how to walk on the tiles to keep from breaking them. Some roof warranties may be adversely affected or even voided unless the roofing contractor installs or can send a person up to supervise installation of a solar system. There is more at risk in a solar installation than the owners' ability to facilitate solar power (which of course is also an important consideration.) These would be concerns of the association. See the notes and highlighted portions below.
The statute says this:
714. (a) Any covenant, restriction, or condition contained in any
deed, contract, security instrument, or other instrument affecting
the transfer or sale of, or any interest in, real property that
effectively prohibits or restricts the installation or use of a solar
energy system is void and unenforceable.
SO, the associations may not prohibit systems (above) - but may provide reasonable limitations (see below).
(b) This section does not apply to provisions that impose
reasonable restrictions on solar energy systems. However, it is the
policy of the state to promote and encourage the use of solar energy
systems and to remove obstacles thereto. Accordingly, reasonable
restrictions on a solar energy system are those restrictions that do
not significantly increase the cost of the system or significantly
decrease its efficiency or specified performance, or that allow for
an alternative system of comparable cost, efficiency, and energy
conservation benefits.
...
(d) For the purposes of this section:
(1) (A) For solar domestic water heating systems or solar swimming
pool heating systems that comply with state and federal law,
"significantly" means an amount exceeding 20 percent of the cost of
the system or decreasing the efficiency of the solar energy system by
an amount exceeding 20 percent, as originally specified and
proposed.
(B) For photovoltaic systems that comply with state and federal
law, "significantly" means an amount not to exceed two thousand
dollars ($2,000) over the system cost as originally specified and
proposed, or a decrease in system efficiency of an amount exceeding
20 percent as originally specified and proposed.
(2) "Solar energy system" has the same meaning as defined in
paragraphs (1) and (2) of subdivision (a) of Section 801.5.
Note that the statute allows for HOA application and approval processes.
This is important too. Hopefully, the HOA board is evolved enough to have
a reasonable policy on solar installations (I have written many so know some
HOAs are aware of this statute). Read on:
(e) Whenever approval is required for the installation or use of a
solar energy system, the application for approval shall be processed
and approved by the appropriate approving entity in the same manner
as an application for approval of an architectural modification to
the property, and shall not be willfully avoided or delayed.
(f) Any entity, other than a public entity, that willfully
violates this section shall be liable to the applicant or other party
for actual damages occasioned thereby, and shall pay a civil penalty
to the applicant or other party in an amount not to exceed one
thousand dollars ($1,000).
(g) In any action to enforce compliance with this section, the
prevailing party shall be awarded reasonable attorney's fees.
...
The following are very important portions of the law, as without them, the other members of the HOA are not protected from the costs associated with installation, damage or removal of systems.
714.1. Notwithstanding Section 714, any association, as defined in
Section 1351, may impose reasonable provisions which:
(a) Restrict the installation of solar energy systems installed in
common areas, as defined in Section 1351, to those systems approved
by the association.
(b) Require the owner of a separate interest, as defined in
Section 1351, to obtain the approval of the association for the
installation of a solar energy system in a separate interest owned by
another.
(c) Provide for the maintenance, repair, or replacement of roofs
or other building components.
(d) Require installers of solar energy systems to indemnify or
reimburse the association or its members for loss or damage caused by
the installation, maintenance, or use of the solar energy system.
Posted by Beth Grimm at 9:38 PM
July 28, 2007
Should Agendas Be Required With Meeting Notices?
SB 528 is a bill before the California legislature. It would add a requirement to HOA meeting notices to include the agenda. Some people love the idea of requiring the agendas to be provided so members can see them, before the meeting, and others hate the idea. Some love the idea that the Board cannot consider action on any items that are not on a pre-noticed agenda and others hate it. Some want more legislative regulation on owner notice issues and some think the technical, detailed and complicated regs such as those proposed below are simply made to trip volunteer board members up. You can judge for yourself. A later blog will cover some of the arguments for and against the provisions in the bill. Here are some passages in the bill:
"(f) Unless the time and place of meeting is fixed by the bylaws, or unless the bylaws provide for a longer period of notice, members shall be given notice of the time and place of a meeting as defined in subdivision (j), except for an emergency meeting, at least four days prior to the meeting. Notice shall be given by posting the notice in a prominent place or places within the common area and by mail to any owner who had requested notification of board meetings by mail, at the address requested by the owner. Notice may also be given, by mail or delivery of the notice to each unit in the development or by newsletter or similar means of communication. The notice shall contain the agenda for the meeting...."
HERE'S THE KICKER ...
"(i) (1) Except as described in paragraphs (2) to (4), inclusive, the board of directors of the association may not discuss or take action on any item at a nonemergency meeting unless the item was placed on the agenda included in the notice that was posted and distributed pursuant to subdivision (f). This subdivision does not prohibit a resident who is not a member of the board from speaking on issues not on the agenda.
(2) Notwithstanding paragraph (1), a member of the board of directors, a managing agent or other agent of the board of directors, or other agents or a member of the staff of the board of directors, may do any of the following:
(A) Briefly respond to statements made or questions posed by a person speaking at a meeting as described in subdivision (h).
(B) Ask a question for clarification, make a brief announcement, or make a brief report on his or her own activities, whether in response to questions posed by a member of the association or based upon his or her own initiative.
(3) Notwithstanding paragraph (1), the board of directors or a member of the board of directors, subject to rules or procedures of the board of directors, may do any of the following:
(A) Provide a reference to, or provide other resources for factual information to, its managing agent or other agents or staff.
(B) Request its managing agent or other agents or staff to report back to the board of directors at a subsequent meeting concerning any matter, or take action to direct its managing agent or other agents or staff to place a matter of business on a future agenda.
(C) Direct its managing agent or other agents or staff to perform administrative tasks that are necessary to carry out this subdivision.
(4) (A) Notwithstanding paragraph (1), the board of directors may take action on any item of business not appearing on the agenda posted and distributed pursuant to subdivision (f) under any of the following conditions:
(i) Upon a determination made by a majority of the board of directors present at the meeting that an emergency situation exists. An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice.
(ii) Upon a determination made by the board by a vote of two-thirds of the members present at the meeting, or, if less than two-thirds of total membership of the board is present at the meeting, by a unanimous vote of the members present, that there is a need to take immediate action and that the need for action came to the attention of the board after the agenda was posted and distributed pursuant to subdivision (f).
(iii) The item appeared on an agenda that was posted and distributed pursuant to subdivision (f) for a prior meeting of the board of directors that occurred not more than 30 calendar days before the date that action is taken on the item and, at the prior meeting, action on the item was continued to the meeting at which the action is taken.
(B) Before discussing any item pursuant to this paragraph, the board of directors shall openly identify the item to the members in attendance at the meeting. "
_______________________________________
So what does all this complicated mumbo jumbo mean? [IF THE BILL IS SIGNED INTO LAW]
1. Boards have to think ahead and plan agendas for board meetings open to the members and have them ready to post with meeting notices. (Hint: if you provide notice of the meeting through the bylaws or a newsletter, just make sure the agenda goes out with a followup notice of the meeting mailed to members or posted in a prominent area of the common area.
2. Boards may not "discuss or take action on any item at a nonemergency meeting" that is not on the agenda. However, there are provisions allowing those at the meeting to override this limitation for an emergency matter; and
3. It seems to me that this would not prevent boards from acting on and discussing emergency items at a legally called emergency meeting (and note that owner notice is not required under the Davis Stirling Act for emergency meetings, but they are defined and regulated by statutes in it).
4. The bill would not prevent discussion on items raised by owners to the extent that questions deserve answers (what you have to be most careful about is taking board action on something that was not on an agenda, unless it fits the "emergency" exception).
5. Boards will definitely have to PAY ATTENTION if this bill passes, think and plan ahead, and be prepared as failure to follow through, IF IT IS PASSED, might have some bearing on whether the action was considered to be legal or not.
.
Posted by Beth Grimm at 8:41 PM
July 16, 2007
Assessments - What is Legal?
Basic board education in California is needed so badly. I get several emails every week that tell me about a board that has raised the assessments more than what I have outlined as the legal limits without a vote of the membership.
I cannot give advice on any given situation that is called out in an email to me; however, I will reiterate the law in very simple terms.
**An HOA board may raise regular assessments (in the aggregate) up to 20% in any fiscal
year without a vote of the members.
**An HOA board may impose a special assessment or special assessments (in the aggregate)
of up to 5% of the budgeted gross expenses in any fiscal year.
**The above limits do not apply in the case of an emergency assessment (however, this
requires findings, certain notices of owners, and an expense that came up after the budgeting
process was completed, in other words, an unanticipated expense, and there are specific acceptable categories).
In any case, if the Board is considering an assessment, or assessments in the aggregate that exceed the above limits (yes, including one, two or three percent more than the stated limit), member approval is needed.
The percentage of member approval is this (and it is my belief the statute pre-empts any higher or lower percentage requirement in the governing documents in California) - a majority of a quorum. A quorum for these purposes is more than half of the owners, not what is in the bylaws of the association if different. That means if more than half of the owners vote, and a majority of those voting approve the increase, the measure passes. Conceivably, that could be as little as 26% of the owners because if a mere majority votes, and a mere majority of those vote yes, that would be 26%.
The statute that outlines these limitations (in language that is somewhat difficult to understand), is Civil Code Section 1366.
Basic Board education would clue in boards that are "clueless". Watch for free HOA chats and class offerings at http://www.californiacondoguru.com. Also, you can go there and sign up for my e-newsletter starting soon. Adding your name to the list will assure that you receive the notices of all classes.
Posted by Beth Grimm at 10:45 PM
July 11, 2007
PREPARE TO BEWARE - Are HOA Transfer Fees Onerous ... Or Not?
You are trying to buy a home in a common interest development (condo, townhome, or single family home with shared amenities or common areas), either your first home, primary, vacation home or rental, or investment property. If you (the buyer) do not ask for an estimate of “good faith” settlement costs at the earliest possible moment from your lender or broker, you may get the surprise of your life down the road a ways. If you are the buyer, or the person refinancing, and you scraped together the down payment, and think all additional costs can be “wrapped into” the loan and amortized over 30 years, think again. And if you are the seller calculating the firm “bottom line”, and subtract the commission only from the amount of proceeds needed to get there, you may end up very disappointed. Alternatively, if you overestimate costs, you are more likely to be happy when the transaction is completed, as you will then come out better than you thought. It's better to feel good than be enraged and in the mood to sue, as was the case of the Browns and the Berrymans mentioned in the blog from July 10.
It is the seller's responsibility to get many disclosures and documents to the buyer, and at seller's cost. A seller can ask the HOA to do it. This saves the seller the work in getting together the documents and the risk in missing some important required document. Using title companies and lenders that offer professional services in a sale closing is advantageous for those reasons. Lenders and title companies take steps to obtain the documents to be placed in escrow and require buyer to initial or sign off on the documents in escrow, so do not think you can avoid having to pay the HOA fees if you copy your own set of documents you got when you purchased and hand them over to buyer.
Fees, fees, and more fees, count on it. Sellers of condos generally have to pay the commission and some closing costs, often the home warranty cost, and the HOA fees for documents and transfer of title. Purchasers generally have to pay closing costs. This varies somewhat even within different jurisdictions in California, but the truth remains, the fees add up. Seller and buyer pay alot for fees. However, in the overall scheme of things, the HOA transfer-related fees are a relatively insignificant expense compared to other costs. Purchasers pay about 8-10 times more for "closing costs" (which include lender and title fees) than the seller pays for HOA fees. Don’t get me wrong, I definitely am not recommending that you avoid using professional resources like title companies to try and save money; you can get yourself into much more costly trouble by avoiding professional help.
Now, just to compare a few things. I recently had reason to examine a good faith closing estimate on a transaction where a piece of property sold for approximately $400,000, with financing of approximately $300,000. These were the fees that were charged (not including the broker fee, appraisal, and the 2 title insurance policies that were required):
LENDER FEES: Tax service $68, credit report $12.50, processing fee to broker $695, processing fee to lender $575, cost of insurance certificate $125. ESCROW FEES: messenger courier $85, email docs to title $50, loan tie in $150, escrow fee $359.50, notary fee $80.00, recording fee $80, home warranty fee to need demand $130 (now mind you, the buyer is not paying for the home warranty - the seller is, but the cost charged to “need demand” is $130 and the policy itself only costs $319).
So there you have it - approximately $2500 in costs not counting points, broker fees, appraisals, warranties and title insurance policies. These costs can easily add $5000-$10,000 or more to your costs depending on the value of the property you are purchasing.
$225-$250, the average cost of the fees related to transferring ownership information within the association, which does require administrative time and work, does not sound so bad anymore, does it? It’s all relative to your mindset and expectations. Maybe it would be a good idea to adjust those accordingly.
Posted by Beth Grimm at 9:17 PM
July 10, 2007
HOA Transfer Fees, What Charges Are Legal, Proper and Acceptable?
A common question, dare I say complaint, of purchasers of property in homeowner associations and realtors who sell them is: “Why are the transfer fee and document costs so high? All you have to do is send over the association documents and they can’t cost that much to copy things - 6 cents a page should do it.”
There have been two cases in the past three years in California (one very recent) providing binding authority, upholding the concept that although there are some restrictions on homeowner association spending and charges for assessments and other costs, the fees that are charged by a management company for transfer of title and the administrative work performed to assist an association in honoring its obligations under Civil Code Section 1368 are not limited by those statutory restrictions. What does this mean? It means that management companies may include in the costs that are charged to the association (or to the seller, for whom the service is provided) a profit margin and sellers (thye usual party responsible to pay the transfer fee) must pay when these costs.
It makes sense and the court discussed this: the ability to include a profit margin applies to all services that are provided to the association, and all vendors are so entitled. The judges in the cases made it clear that neither the laws nor the case decisions said the vendors that serve associations are required to operate as nonprofits (even though the association is a nonprofit organization) with fees charged to associations for services that are provided including services related to transferring title records and rights from one owner to another. They also opined that the market place and competition would provide a sufficient mechanism to keep these costs effectively under control.
So what is a commonly accepted “transfer” fee? I have asked around, and have come up with a range of numbers that seem to be fairly common: around $100 for documents and $225-$250 for the work related to transfer of title and all that entails for companies or vendors under contract to provide services for the HOA. Of course, if there are keys, key cards, vehicle registrations and a host of paperwork outside the usual - or litigation requiring extra disclosures - or the like - these fees could be higher. One might suggest the standard for self-managed associations should be less as a profit margin would not be allowed according to the cases. In other words, associations are more limited in charges that can be made than vendors who have a right to expect a profit. Essentially, the limitations on associations are the cost of copies and the actual cost to the association of providing the Civil Code Section 1368 information.
My information on the common fee estimates comes from speaking with realtors, title officers, reading the cases, and I myself have had personal experience involving purchase of and sale of condominiums. The recent Berryman case confirmed that this range seems to be in the ballpark. Merit is a very large management company and was charging $100 for documents and $225 each for the transfer of title work in two associations, a master and sub-association, because in the case of the Berrymans’ property, it was located in two different associations. The court did not condemn these amounts nor question the reasonableness of them and I think that has some significance. $100 for the cost of the documents may be high for an association to charge unless it orders the documents from a provider, such as condocerts.com, that provides this service, as the cost of copies and mailing alone probably would not add up to $100. The $225-$250 range may be high for associations as well, since, at least as to the case of Berryman v. Merit, the fee included a profit margin and administrative costs that a self-managed association may not incur.
The two cases on this fee issue are:
2007 - Berryman v. Merit Property Management, Inc. and
2005 - Brown v. Professional Community Management, Inc.
Although these cases proved successful for the management companies required to defend claims of unreasonable behavior, don't think this is the end of the inquiry. For each of the past several years and currently, the California legislature is again reviewing several pieces of legislation dealing with proposed limitations on transfer fees of various types
Posted by Beth Grimm at 9:47 PM
July 7, 2007
More on Flowers - and Exclusive Use Areas
Here is a continuing dialogue on planting flowers in the common area:
A reader responds to me (after the prior June 20 blog) "BUT, if the board allows homeowners to plant flowers outside their units and requires them to maintain their area then what happens when the property is sold and the new owner refuses... because....after all, he/she didn't plant those flowers?"
My answer: Use of a recorded agreement could solve this.
Another question: "Also, I would think that the board would have to carefully define what maintenance is required. In order to plant flowers, it requires good soil, plenty of water and fertilizer and possibly insecticide. Not to mention periodic pruning, depending on what kind of plants or flowers are planted."
My answer: I could not have said it better. The requirements and expectations should be outlined - when expectations are carefully defined, everyone fares better. Differences of opinion are more easily resolved.
Reader, perplexed: "I still don't understand what exclusive use of the common area really means or what it encompasses."
My response: I'm a lawyer, and neither do I ... ha ha ... the answer in each case "depends" on a lot of things that should be considered. Its not the same in every assn. And in many, its not defined well. To fully vet the answer, an attorney would need to review the governing docs for the association, Civil Code Section 1351 definitions, and would need to understand the type of development and how the buildings, common area, and everything is situated to answer the question as to that particular association. The attorney would need to know whether the Board is inclined to or would like to allow individual planting areas and the like. And the attorney would now have to factor in the limitations set forth in Civil Code Section 1363.07 relating to transfer of common area for exclusive use (a new law as of last year) to fully answer the question.
Posted by Beth Grimm at 8:23 AM
Managers Giving Advice On Amending Docs - Be Careful ...
I received a question from a reader about amending bylaws. This is it:
"We were told by our management company that changes in the byaws could no longer be decided by the majority of the board but needed the majority approval of the voting membership just like the CC&R's. Is this true?"
Here is the long answer to the short question. There are two things going on that I think are important to point out:
1. What is required for document amendments; and
2. Is the manager giving legal advice on a question that should have been posed to an attorney. (By the way, I see some variation of this just about every day, sometimes innocently - such as a manager responding to a question by spouting what he or she learned at a recent seminar or by reading an industry journal, and sometimes with the intent of avoiding legal fees. )
So on to the answer to these two items:
There are instances where non material Bylaw amendments can be made by a Board (very few). Tthe Corporations Code allows for this so it would only apply to incorporated HOAs. See the following:
7150. (a) Except as provided in subdivision (c) and Sections 7151, 7220, 7224, 7512, 7613, and 7615, bylaws may be adopted, amended or repealed by the board unless the action would:
(1) Materially and adversely affect the rights of members as to voting, dissolution, redemption, or transfer;
(2) Increase or decrease the number of members authorized in total or for any class;
(3) Effect an exchange, reclassification or cancellation of all or part of the memberships; or
(4) Authorize a new class of membership.
I am not going to recite all of the exception statutes - they cover just about everything. Suffice it to say that the board could not make any material changes at all, and certainly none related to membership, voting, elections and recall, the number of board members, terms, or anything meaninful to the members. The safest assumption always has been that amendment of the Bylaws in a homeowners association requires membership approval and the requirement for the percentage is normally stated in the Bylaws.
When a board is considering amending the bylaws, it is always best to get good legal advice from a practitioner experienced in the particular field of law. Managers do not generally know the Codes as well as an experienced HOA attorney, nor have they seen as many mistakes or misconceptions as an experienced and educated HOA attorney (although there may be many that know more than an inexperienced HOA or non HOA attorney). And this situation is a particularly good example of how the answer can get convoluted by complicated laws. As for recent changes in the law ...
The changes in the elections laws for homeowner association that took effect last year (2006) may be what the manager was referring to, but I am not sure without talking to the manager whether he or she fully understands the impact of the new election laws. The new law does "muddy up the waters" because the new elections requirements do relate to document amendments. The new laws (in a nutshell) provide that anytime the Board is conducting an election to amend the bylaws (or other governing documents) the election must be conducted per the new double envelope secret ballot system . Some might loosely interpret it to mean that all amendments require membership approval but I do not believe that to be the case exactly. See the language:
"Notwithstanding any other law or provision of the governing documents, an election within a CID regarding assessments, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section.
So while it is true that the law does pertain to elections for bylaws amendments when an election is required, it does not require that an election be held for amendments to the governing documents. Likewise, it does not require any election of members to approve amendments to the rules, which are also included within the definition of governing documents.
There is a difference, as you can see. Perhaps the manager, in referring to a recent change, was referring to the new elections laws; but if the manager's "opinion" was stated correctly to me, and the change being explained to the board is stated as it occurred, it reflects a misunderstanding of the impact of the changes in the new elections laws. They do not force or authorize elections on any topic - they simply apply to situations where an election is warranted.
Understanding seemingly minor technical differences can be quite important.
So, to get back to the bylaws amendment question, if the Bylaws are silent on a membership voting requirement, and the HOA is incorporated, the statute recited above would allow some amendments without membership approval (assuming the proposed amendments do not fall into any of the exceptions that are noted which collectively cover just about everything important). And if no election of members is required, that no vote would be required and thus, the new election requirements would have no bearing on the process.
And now, you are probably asking - if the Bylaws are silent on voting requirements to amend, and the subject matter of a proposed amendment is material, then what happens? The answer: any measures that fall into the many exceptions to Board approval would still have to be approved by the members, per the Corporations Code.
So, again, the safest and most conservative position to take on considering amendments to the bylaws is that membership approval is required.
Now, the next question... should managers write bylaws amendments and prepare the voting materials?
I think that is fine, but I also believe before presentation to the members, a board needs to have its election rules formulated and if possible, in place, and needs to have a knowledgeable attorney review the proposed amendment measure to assure it is properly stated so that it does not raise other issues of some kind. A very common mistake in proposing document amendments is to propose a change in language, without identifying that it replaces or supplements existing sections or without proposing a necessary corresponding elimination of lexisting anguage in the documents that needs to be modified or eliminated. Without this extra attention, the Association can be left with difficult conflicts in language and impact as between the original document and the amendments.
And I imagine now you are thinking ... attorneys just complicate things ...
I respond ... contradictory and hard to understand laws provide fuel for the fire!
Posted by Beth Grimm at 7:29 AM
July 5, 2007
HEARINGS - Open Or Closed, What's the Standard?
People have considerable confusion about disciplinary hearings in California HOAs, or are they called "disciplinary meetings"? The law in California sort of confuses things. Here is a question from a reader (and then below is some commentary about how to interpret it and make good use of the "meetings", and the Davis Stirling provisions).
"We been sent a letter from our HOA 'Notice to Appear at Hearing'. Our Rules and Regulations say that the hearing shall be a public hearing and shall be open to all owners. Since we are under the understanding that this is a public hearing we hired a stenograher to attend our hearing. The representitive from the management office stated that we can not do this, it is not allowed unless we have their permission to be recorded. Is this true? "
There are a lot of questions in this seemingly simple question and concommitant statements. I do not have the documents for this association but will say that I believe the proper way to interpret whether the documents or law controls about timing and other requirements for disciplinary action, revolves around this conceptual idea: if the documents require more steps or procedures, or more information than the Davis Stirling Act, and timelines that favor the owner subject to discipline, the documents probably will be considered controlling if the statute is silent about control. This is because the law commonly addresses the minimum standards for due process, and the documents may require more.
Here is what the Davis Stirling Act requires:
Civil Code Section 1363(h): "When the board of directors is going to meet to consider or impose discipline upon a member, the board shall notify the member in writing, by either personal delivery or first-class mail, at least 10 days prior to the meeting. The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined, and a statement that the member has a right to attend and may address the board at the meeting. The board of directors of the association shall meet in executive session if requested by the member being disciplined. If the board imposes discipline on a member, the board shall provide the member a written notification of the disciplinary action, by either personal delivery or first-class mail, within 15 days following the action. A disciplinary action shall not be effective unless the board fulfills the requirements of this subdivision."
This is what the Davis Stirling CID Open Meetings Act (Civil Code Section 1363.05(b) says about exeutive session meetings related to discipline:
"(b) Any member of the association may attend meetings of the Board of the association, except when the board adjourns to executive session to consider ... member discipline, personnel matters, or to meet with a member upon the member’s request, regarding the members payment of assessments as specified in Section 1367 or 1367.1. The Board shall meet in executive session, if requested by a member who may be subject to a fine, penalty, or other form of discipline, and the member shall be entitled to attend the executive session."
So, the question arises: Does the member need to 'request' a closed or executive session hearing or will it happen naturally?
Many boards, upon their attorneys' advice, hold owner disciplinary hearings in closed executive session proceedings. Most tell the owner this in a letter. Some acknowledge that the member may ask for an open meeting. If the documents require an open meeting for any hearing on proposed disciplinary action, then there is a conflict with the law, and a determination has to be made about which will be followed. Boards generally assume that a closed hearing will better protect the owner's privacy but sometimes owners would prefer an open hearing believing that they can convince other owners present that the board is off base, or in order to invite others to speak on their behalf and pressure the board not to impose discipline. There is no case guidance interpreting which position may be more correct when the document and the law collide like this.
As for inviting a stenographer, or taping a meeting, members must have permission of the Board. Taping meetings is not a right. The Board sets the standards and parameters for association meetings. There are a number of reasons why this is important - (this being for a later blog).
Posted by Beth Grimm at 9:48 PM