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November 4, 2009
What Do You Do When Your HOA or CONDO Docs Are Old & Crappy & Not Helpful?
I just got a call this am from the manager of an association in SoCal. Question asked: "Our documents are very old and not helpful. We just got a request from an owner whose garage door broke and they want the board to fix it. The board looked at the docs and tried to interpret them. They don't know what former boards did. How can we decide what to do? How can we get consistency?"
The obvious and best answer of course is to amend and update the governing documents. However, some associations do not want to spend the money or take the time right now for various reasons. Some do not think they can get owners to vote on something. So, here are some interim measures:
If you want to make sure that the board and owners know what changes have occurred in California law (specifically the Davis Stirling Act which regulates HOAs and Condos in the state), there is a product available on my website called "A TuneUp". It is an attachment that states what new laws are in effect that supersede provisions in the existing documents. It does not require a vote of members; it is not a recorded document, but it is informative and helpful and can be supplied with every set of documents that is sent out to new owners and to current owners so that the board and owners are educated and all on the same page about the status of the law and its affect on the existing documents.
If the question is determining who maintains what, as in the above question, then a good interim measure to amending, restating or updating the governing documents is adopting a "Policy on Maintenance Items". The policies I prepare are in the form of a matrix listing the maintenance item, and who maintains it, the association or the owner. I get the information for the matrix from the existing documents, past practice (if known), California statutory and case law, and the reserve study.
A policy is essentially a rule which does not require owner approval, and before the board approves it, it must circulate it to owners as a draft, and allow at least 30 days for a comment period. It must then review it and consider approval at an open board meeting. Then, once approved, the board must send out the final approved version to owners right away.
I am working on a maintenance primer - years ago I did a newsletter when I was sending out the subscription NL called "The California Homeowners Association Legal Digest" and it was a big hit. I am expanding that into a 20 page primer on various issues that I have seen come up. I also address these things in both of my books (Finding the Key to Your Castle and The Condo Owners Answer Book). These are also available on my website. The maintenance primer will be released close to the time of my next free E-newsletter (you can sign up on the site) this month.
It takes only a couple of hours to review documents and prepare a maintenance matrix/policy, a resolution, and instructions to a board on how to implement the policy. The great thing about this tool is that the courts tend to rule in favor of a policy if it consists of an interpretation by the Board which was done in an attempt to work with older documents. Why? Because it promotes consistency and the courts like consistency and often defer to the board's judgment if there is nothing indicating the board was "out in left field" when it came up with the policy. BTW - if you want an example of "out in left field" I recently was called upon to assist some owners in getting fair treatment because the board adopted a rule that clearly and unfairly adversely impacted a small group of owners in a large association. That is too far "out there."
And another thing, asking an experienced attorney to assist in drafting the policy adds a measure of protection if the board is sued for its policy because the board has the corporations code protection gained by consulting with the right kind of expert instead of shooting from the hip. I also recently dealt with issues in an association that arose because of a manager prepared maintenance matrix based on California law (Civil Code Section 1364) without regard to what the documents said, and it is important to understand which controls.
So ... if your board is floundering around trying to determine what to do about questions that come up for which there is NO guidance or CONFLICTING provisions in the governing documents, you can seek out good help and get on the right track now, instead of trying to get back on the "right track" after being hit by the train.
Posted by Beth Grimm at November 4, 2009 11:13 AM