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April 9, 2009
Small HOAs and CONDOs - What Are The Options Legislatively and Otherwise?
"Small" HOAs and Condo Associations - Maybe we should be talking about the differences between ultra small (10 and under) and small (25 and under, as NL says, or 50 and under as the CLRC says) associations - because there are some considerable differences. Both of these groups suffer many similar maladies:
***Are seldom professionally managed
***Are subject to the same laws that large associations have to follow
***Have the hardest time finding enough board members to serve
***Have the hardest time raising money for services or projects AND
***Have the hardest time with the new election rules
The California Law Revision Commission (CLRC) is studying these things. And below are excerpts from a letter provided to the CLRC (and also sent to me) by a California homeowner who is concerned:
[Dear Brian Hebert - Who is Chair of the CLRC]
... "I believe that the number of units in an association is the best measurement in what constitutes a small homeowner’s association. If the purpose is to simplify the requirements for small associations, then the number of units is the only factor that matters since all the operations of the association have to be performed by a limited number of persons.
...
I would like to address election procedures in smaller homeowner associations. We are a 7 unit association. Due to our small size, we elect 4 directors who are also the officers. Since we have a limited number of residents, most of the homeowners have been willing to serve on the board for a few years and then find another homeowner to take their position when they grow weary of the work. Up until our 2008 elections, we never had more than 4 candidates in any given year who wanted to serve on the board. Any homeowner who was willing to take on the job of a board member could have the position and the homeowners would unanimously approve them. We did not use secret written ballots until 2007 and it wasn’t really secret in 2007 since only 4 candidates were willing to take the 4 board positions. If you want to do the work, the homeowners will vote for you.
...
In 2008, the position of secretary became available due to our former secretary of 3 years tiring of the position. Our election was conducted in accordance with the law using secret written ballots. All 7 homeowners returned their ballots. The outgoing board has only 3 of the 7 homeowner votes. The incoming board still has only 3 of the 7 homeowner votes. We also have space for a write in candidate for each position although no homeowner wrote in a candidate.
...
We also used secret written ballots to pass amendments to our bylaws this year. Homeowner’s 2 thru 6 voted in favor of passing the amendments. Homeowner’s 1 and 7 did not return their ballots. What’s the point in using a secret written ballot when the results will never be a secret? If they aren’t secret in a 7 unit association, they could never be secret in an association less than 7 units.
In-person voting in our small association would save us some time, although the results will still not be secret. There is a significant difference in a 7 unit vs. a 25 unit association. At a certain size association, secrecy could be attained. I hope you hear from other size associations on this issue.
I know the commission has received comments from others that imply smaller associations have contempt for the law. Our association does not have contempt for the law. We simply are asking that the law be reasonable and equitable. It presently is neither.
NL"
Let's take a look at just the elections for a moment. In a 7 unit association with an upcoming election for the 3 director positions, who is currently serving? who will run for the board? who will serve as inspector of elections? ...
None of the inspectors may be related to any of the board members in any way, they must be independent. And given that some members have shown they are totally apathetic and not willing to vote, let alone serve, that exacerbates the situation. Must the Board go outside the HOA or Condo Association to find and/or hire an inspector of elections?
What if the owners want to gather in a room and choose directors among them based on who are willing to do the work on a volunteer basis, maybe using a calendar to "divvy up" the next few years of service? Can they do that? Not under the current law on elections.
I do not believe that small HOAs necessarily have contempt for the CLRC or the law itself, per se - but I find that once a small association is introduced to the vast array of laws that apply to them, I do believe they develop contempt for the complicated nature of the laws that apply - especially when they do not have the resources to keep up with them.
Am I saying small associations should not be subject to the Davis Stirling Act? Not even close. What about the meetings laws - should they apply? Yes, they should. What about budget and reserves planning and assessment collection, should they do it? An emphatic "yes" for condo associations with buildings to maintain, or HOAs with shared amenities!
But the complicated election laws? In a 7 unit association, as NL says, there is no secrecy to the voting. Everyone can figure out how everyone voted, even if the Association uses a double envelope ballot system for elections. So come on ... yes, I agree, think "ultra small" vs "small".
And check out the recently issued Memorandum MMO9-19 at the CLRC website http://www.clrc.ca.gov!
Posted by Beth Grimm at April 9, 2009 10:11 AM