California Condo & HOA Law

July 14, 2008

WHO DO THEY THINK THEY ARE - TELLING ME WHAT TO TAKE DOWN?

Sometimes one wonders all of the whys and the wherefores. Especially when they hear only one side of the story.

Here is a recent post from a reader (and see my answer in italics following the questions):

"There is an enclosed balcony in my condo with two open air windows. The
space was unusable due to high winds and salt off the sea. So I built very tasteful clear vinyl wind blocks so I could use the space, very similar to blinds, but clear. I thought this was okay.

Earlier, I had met with the owners of the condo and mentioned I was thinking of putting up something there to block the wind. They said they thought if I didn't put up a big sign with a slogan on it or something that it would be ok.

Within a very short time after putting up the wind blocks, I got a letter from the management company saying the wind blocks violate hoa rules andt they tell me they need to be taken down right away.

Do I have to comply even though I did not enter into a contract with the hoa? If I don't take them down, and there are fines against the owners, willm y rental insurance pay for it? The rental insurance includes legal fees if I am sued.

If I leave them up temporarily or permanently, can you see what problems that might cause?"

First of all, I would be asking the question: If the windblocks are clear and cannot be seen without close scrutiny, why object to their presence? It seems obvious in areas by the coast or otherwise subject to high winds that windbreaks are often needed to allow people to fully enjoy the outdoor spaces adjacent to their living units. One sees them everywhere. Just take a walk along the coast in Carmel or Monterey.

I can understand if the Board would be concerned about deteriorating, scratched or discolored windbreaks or mismatched or patchwork styling, but standards can be adopted for consistency and windbreaks that become a hazard or eyesore can be ordered removed or replaced, with penalties for failure to do so. So I invite the readers to tell me what a good reason is to disallow windbreaks in a situation like this (so I can be informed).

That said, the Condo Board does have the legal authority to set and enforce rules and the rules are presumed reasonable and enforceable unless an owner can (essentially) prove they are against the good of or harmful to the community as a whole (in very loosely paraphrased legal terms). That is a tough burden to meet.

Any disciplinary action would normally be rendered against an owner for a renter's conduct (or misconduct, violation of the rules and regulations, etc.) so it is up to an owner to deal with a tenant who creates a situation where penalties are being considered. Of course, a landlord owner can write into their lease (and should, for their own protection), that if the renter violates the rules or regulations of the Condo Association and there are any penalties involved, the renter has to reimburse the owner, and can (and definitely should) include a clause that says if a renter violates the rules and regulations, that is grounds for the owner to terminate the lease. That probably does not sound helpful to this renter who asked the questions, but it is the way it should be.

Now, for the questions about what can happen if a violation continues.
If the documents allow, and California law has been followed with regard to the processes required, fines might be imposed. If the Condo Board has to get legal assistance and the documents allow, and California law has been followed with regard to the processes required, reimbursement assessments might be imposed. The latter, if unpaid, could lead to liens and such, and possibly even foreclosure, so the penalties can be severe.

I wonder if this renter is not telling me something, like any reason given by the Condo Board for not allowing windbreaks. I wonder if you out there can tell me why a Board would not look for some options in this regard to offer owners (at their own expense) in properties subject to high winds?????

I feel the need to be enlightened on this one.

As to renter's insurance, it is very important to have. However, I do not know of any that pays for fines or legal defense for taking action that one knows is likely to lead to fines or legal action.

Posted by Beth Grimm at 10:26 PM

July 9, 2008

BANK OWNED OR ABANDONED HOA PROPERTY FALLS INTO DISREPAIR - WHAT TO DO?

Because of the economy, the mortgage crisis, and other negative factors for HOAs today, HOA boards and neighbors are having to deal with more and more properties that are being foreclosed and abandoned (owners simply walking away). I am receiving many questions from HOAs and managers asking what to do when the lawn falls into disrepair or dries up and creates an eyesore in the neighborhood. Here is a recent email:

"I have a quick question. Can an HOA maintain/replace a front lawn that is dead or dying on an empty REO (bank owned property), put a lean [sic] on the property for the maint. fee, and collect the maint. fee when the foreclosed property is sold?"

Wish I had a "quick" answer. There are about 16 topics that would need to be discussed to answer this question. I plan to do my next free E-newsletter on this very subject so go to the website at http://www.californiacondoguru.com right away and sign up. If you prefer not to do that, watch the E-newsletter Archives after the end of July to see the newsletter.

What are all the questions that need to be considered to give an answer to the above "simple" question?

Is the Owner responsible for the lawn maintenance, or is the problem that the Owner was providing the irrigation and the water was turned off for lack of payment. This happens in many associations where the HOA maintains the front areas but the Owner is responsible for the irrigation, and when they abandon, the irrigation system breaks down, stops working, or the water is turned off.

What do the documents say about collecting money for something that is an owner obligation? Are there provisions for assessing a reimbursement assessment? Can it be done with, or without, a hearing (because of California law, in California a hearing will likely be required)? Is it necessary to seek a judgment to collect per the documents? Is the assessment subject to the lien (per the documents)? Or Not?

Does the HOA have the money to maintain lawns for abandoned or Bank Owned property in its coffers (these days, it could be expensive if there are several properties in the same boat).

How long would the HOA intend to maintain? Does it give potential purchasers a false sense of security to buy in the development without being aware there are bank owned or abandoned properties in the development? Is that actionable misrepresentation to hide the fact through maintaining the property for an absentee owner?

Do you know if the property is really bank owned or simply in the lien/foreclosure process (in which case it could be many months before the bank assumes any responsibility for the costs)?

As to the above question sent in by the website visitor, generally, HOA documents have some sort of recourse in them for the HOA to collect the costs of performing maintenance what the owner fails to maintain. So if a property is really bank owned, eventually the HOA may be able to recover the costs from the first day the bank took ownership, if the HOA follows the HOA document requirements to make the charges, and if the HOA can locate the right person at the bank to respond.

As for the rest of the questions and answers, watch for the upcoming "E-News" called "What's New In HOA Land" on the subject.

Posted by Beth Grimm at 10:28 PM

June 24, 2008

Requests of the Disabled

Many HOA Boards are confronted with special requests of the disabled. Sometimes they are justified, sometimes not.

Here are some requests that I found to be justified over the years:

An owner who was deaf asked the board if it would provide a sign language interpreter at the board meetings so the person could understand what was going on. The Board said "no", it was too costly. The owner asked if they could bring their own interpreter to the meetings. The Board said "No", that was too disruptive. That Board exposed the HOA to serious damages. The Owner contacted the Fair Housing Dept who took the case, sued, and the HOA paid damages, somewhere in the neighborhood of $30,000 is what I heard.

The Condo HOA CC&Rs prohibited dogs. Owners could have cats. An owner said they wanted to have a dog and would have it. The Board said "No". The owner said they were depressed and the dog brought them happiness. The Board eventually actually did say yes, if the owners kept the dog in their enclosed patio, and carried it to and from the car in a carrier. The people moved away. The Dept. of Fair Housing took the case, and pushed it through the appeals court (even though they lost at the Superior Court) and won. The owners were granted about $8,000 in damages and attorney fees.

Questions often come up about parking spaces. A disabled owner wants a parking space closer to the unit entry and the Board is dealing with a situation where spaces are assigned on the deeds. Does that always absolve the HOA? No. It does not always absolve. Sometime the owners really want special favors for the household residents that are not disabled. For example, in one case that came across my desk, there were two residents, one with a heart condition and one perfectly healthy young (40's) male roomate. While the unit was assigned one parking space very close, the disabled resident demanded assignment of one of the close open parking spaces as a handicapped designated space. This would have given the two residents the assigned spot plus an extra parking space (since the disabled resident was apparently the only person in the complex qualified to park in a disabled space). The Board said "No" to that. So far, no repercussions.

Here is a recent note sent to me by a reader:

"I am a paraplegic. I have resided at my current condo for several years and I have never been able to come to a meeting. I have requested accommodations by perhaps asking that the Board at least have meetings outdoors in the summer. I was told by the Board there was no place outdoors that was quiet enough for meetings (too many noisy kids aroung the pool area). I believe this is just an excuse to keep me away from board meetings. Out HOA has another common area place that would work just fine, but the Board will not even consider it. Do you think that I could request a copy of the minutes (free of charge) as an accomodation?"

My answer would be that an owner can request any accomodation that he or she wanted to - the real question is - will thte Board approve it. In this case, if the Board cannot reasonably accommodate a request to change the meeting place, it seems that it would not be a huge burden to email the meeting minutes to the owner each time there is a new set, so the person could at least have the information. I wonder if the Board has considered having the meetings (if they meet in a board member's unit) with a speaker phone at the board table so that the owner could listen in. I do not know in this case if the owner really would attend meetings if they could, or if they have tried to find a way to get into where the meetings are (as I do not know how many steps there are, whether it is possible for other members to help this one into the meeting room, etc.). I can hear the Board now, though ... No, it's too much trouble because .........

And it may be ... or maybe not. The question the court would want answered is: "Is there a great burden to the other members or high cost in granting the accommodation?" If there is a great cost or burden, then there may be justification for saying "no".

In this latest case, I would guess that there is something the Board could do to accommodate this member's desire to be informed - but I am not going to give any advice as it would be too general to be useful.

I lean toward "giving" whhen it makes sense to do so. And an owner that wants to be informed often wants to be involved. And that is generally a good thing.

There is a statute in California that requires Boards to be as accommodating as possible (if there is not too great a burden) to grant requests that allow the disabled to get to and from their units. It allows the Board to defer the costs to the owner or resident and allows the Board to require reinstatement of the area that was changed with the accommodation when the handicapped person leaves (Civil Code Section 1360). And there are federal anti-discrimination statutes and cases that suggest a Board should make an accommodation for any resident that claims a disability if it is possible to do so (very loose paraphrasing but also indicative of how I feel the statutes and cases go), even if at the resident's expense. Some of the federal statutes are misconstrued to apply when they really do not directly apply (the ADA in particular), so legal advice should be sought (don't quote my opinions or thoughts as legal authority because before giving any specific advice, I would ask a lot of questions about the circumstances).

Still and again, I think Boards are better off to look at the requests with an open, rather than a closed, mind, and look for solutions rather than excuses.

Posted by Beth Grimm at 8:48 PM

June 18, 2008

Renters - Minutes - Do the Two Go Together?

Here is a question that has come up more than once:

"Should the Board distribute minutes to renters?"

One reader says: "Our current Board of Directors sees nothing wrong with sending out our minutes to renters. I objected so the current BOD position is that they will send "sanitized" minutes removing financial information to the renters. ... Our CCRs do not address the subject, but I think all owners should be concerned about inviting the involvement of non-owners into whatever actions or issues are addressed in our HOA minutes. I believe that the HOA should restrict its contact with renters, and that contact should first flow through their owners or property management companies. What is your opinion on this?"

Another reader says: "Our board does not send any communications, including minutes, which are distributed regularly to owners (we are a small association) to renters. My tenants are very interested in what is going on in the association and are planning on buying the place as soon as they can. Should I not be able to give the board my permission so that they can include my tenants in the list of communications about the association, including the minutes?"

So ... what are ya going to do? Two views. Two positions. This is what I think.

The minutes contain information private to the association, and care should be given to handing them out publicly. There is generally no legal requirement to provide the HOA minutes to anyone, but owners in California do have the right to ask and when they ask, can get copies, at cost.

That said, HOAs do want tenants to have copies of the rules and governing documents and so do want them to know something about what is allowed and what is not allowed. And buyers tend to ask for a year's worth of minutes among the documents related to purchase of a property in an HOA these days (if they are savvy). Condocerts.com which is a website that serves as a source of HOA information and documents for lenders, title companies and others who need to obtain documents related to sales of condos and townhouses asks HOAs that list with them to provide minutes for availability of these entities.

Still, I do not see a good reason to go to the extra expense to provide minutes to tenants. It requires the Board, if they send them out, to keep a separate list of recipients as generally, the owner and tenant lists would be kept separate. Associations that post the minutes in the common area (many do) are in essence providing this private information to all who pass by. Good or bad? I would like to say open communication and transparency is good, generally, but when minutes contain sensitive information about HOA financial issues and the need to consider a special assessment, or other matters such as discovery of an association-wide problem, the duty to the owners is to be prudent and prudence I think suggests not to disseminate the information further than the owners.

And I would not be in favor of having two sets of minutes, one sanitized and one not. That could be confusing.

However, renters tend to feel more involved if they get news of association matters and events. Distribution of the HOA newsletter to owners and tenants could be a good thing for the community and could help bring the tenants under the umbrella of good citizenship by understanding the rules or procedures of the association. My recommendation would be to include them in distribution of the newsletter, if it does not contain overly sensitive information, but not if it involves considerable expense as the owner can always provide what they want to their tenants.

My two cents. No cases or laws that I know of on the subject.

Posted by Beth Grimm at 10:24 PM

June 7, 2008

LEASE LIMITATION PROVISIONS - ARE THEY GOOD?

I have done 3 other posts that touch on the subject of Lease Limitation provisions. Based on my research, and experience, I think it time to provide some simple explanations about what they mean. A lease limitation provision might be based on any of the following ideas (or maybe someone out there has something more creative to offer:

Limit on number of units/lots that can be leased at one time.
Limit on leasing for the first year, two, or three after purchase.
Limit on term of lease, for example – one year minimum.

The thinking behind these restrictions is that the properties will not invite investor purchasers but rather would be enticing to persons intending to reside in the property who are interested in a community with limits on leasing. Resident owners that plan to continue to reside in the property like this idea very much. Resident owners that tend to “move up” in the coming years and want to keep and rent their properties out would not be so fond of the idea that they could be prevented from doing so. Investors and leasing owners would not like the idea at all.

The simple truth that many people believe and experience is that high percentage rental communities tend to have many more problems than lower percentage rental communities. Way back in 1985, the last time I know of that any study was done, the California Department of Real Estate commissioned a study and that is what the study showed. So I am not the only one that believes this, no sir.

Another simple truth is that it is harder to get conventional financing for properties in common interest developments because the largest purchasers of residential loans in the country – namely FNMA and FHLMC (more commonly known as Fannie Mae and Freddie Mac – sounds like something right out of the Flintstones) have limits on purchasing loans in high percentage rental communities. So, if your HOA is over 30-40% rentals, and it becomes especially apparent if it gets over 50% rentals, the financing gets tougher to find, through conventional methods at least. However, see below for more on this in today’s market place.

Another simple truth is that renters are generally more transient than residents. Of course I know there will be those that will come out of the woodwork to let me know they have been darn good renters for more than 30 years! But, get real people, the transient part of society tends to have less interest in taking care of the real estate they occupy for temporary purposes than the buyer who has crossed the line into property ownership and has pride in that “piece of dirt”.

Another simple truth is that investors often have different interests than residents. While some investors take great pride in every piece of property they own, others are only interested in the bottom line – how much rent can they pull in – how little can they spend.

Another simple truth is that the provision when it is posed to the members (it does require a CC&R amendment) could “grandfather all owners” in the development at the time the measure is passed, which would put everyone in the development at that time on the “same plane” and alleviate the second two arguments above that owners who want to rent their properties and investors which would mean they would never be prevented from leasing their property. [There are pros and cons to that which have been and will be further explained in communications on this subject written by me.]

And the last, but perhaps hardest bit of truth, is that while the leasing limitation provisions do help keep or lower the percentage of renters in any community, they still can “bite” the innocent. What about the person that thought the restriction was great, until their life circumstances changed, they needed to move away temporarily or permanently, the market went south (what a concept, huh?), and they could not afford to “give away” their property in a bad market.

And, there is a wide range of enforcement tactics out there; some communities are very lax in enforcement since they do not want to enforce such harsh provisions on their neighbors, others are militaristic in their enforcement. The laxity can lead to legal issues, and the militaristic view can do the same.

In order to make a lease limitation restriction fair, reasonable, and able to pass court scrutiny, I believe (and again, this is based on my reading of the cases all around the country and in California), there has to be some kind of hardship provision. This means that if someone is called off to war, and they are going to be doing a duty tour, they should be able to temporarily lease their property during that time! If someone has a medical disaster – either them or a family member – and they need to be somewhere else for a period of time, they should be able to temporarily lease their property during that time! There are those who would disagree even with that. And, of course, there are those that might “embellish” or make up such a story when the Board members know it to be less than true.

And why would an investor vote for such an amendment? So long as they, at least are grandfathered (which wise at the least if an HOA does not want to get into the argument that has occurred in some state cases where the court recognized that such owners may have a “vested interest”), then it is possible that under such an amendment, rentals by others would be on the decrease and the property values could appreciate considerably. I believe this is especially true in a higher percentage rental development where sales are affected by the lack of available financing. It may take longer to get the percentage down, but to many, at least the development would be headed in the right direction.

So, although we know that these provisions can help dramatically in lowering rentals in a common interest development, we know there are pros and cons to them. We do not know for sure where the law is going on these. There have been some Superior Court decisions in the past couple years in Santa Barbara and further south that have upheld lease limitations. More will be reported on these as the time for appeals and any appeals have run. There is also a statute that has been introduced in California that would place some restrictions on enforcing the restrictions.

Please – if you want more information on this – continue to follow this blog (aka California Condo & HOA blog and Beth’s Blog) at http://www.californiacondoguru.com and also sign up for the free E-newsletters from that site. Watch for future Primers on the topic (helpful learning tools available on the website). I will be circulating the next E-News soon, so sign up soon! The Primers, when completed, are inexpensive and helpful.

There is so much to be done to get the word out. People do not seem to fully understand the benefits and the drawbacks and the only way to do that is to follow the articles and posts. Boards often, believing that these restrictions are for the benefit of the community and will sail through, put a ballot out only to be blasted by those who are either uneducated about the provisions, or have the “King of the Castle” mentality. In other words, they have not prepared the membership and it comes back to stifle the process.

Posted by Beth Grimm at 12:57 PM

May 21, 2008

Are the New FNMA Guidelines Realistic?

Adrian Adams of Adams and Aucoin in SoCal just put out a newsletter listing the new requirements FNMA has published. You can read what he has to say by visiting DavisStirling.com (not a government-backed website; its a law firm website - but very informative), and what FNMA has to say by visiting https://www.efanniemae.com/sf/refmaterials/approvedprojects/index.jsp?from=hp.

Here is my take on the new regs. GET REAL FNMA! If this secondary lending organization (known for buying loans in bulk) wants to continue to buy condo loans (and I assume there is a profit in it or who would be in the business of doing it??), I foresee having to back down on some of the new requirements. Why? Here are some reasons:

1. HOAs in California are typically underfunded, meaning shy of having 100% of the money needed to fund improvement, rehab, reconstruction and major projects. Heck, many are having a hard time meeting operating costs. The new regs require lenders to attest to the fact that the HOAs are "adequately funded." At the request of a couple of lenders, I created a lender class to help them learn to read association budgets and reserve studies in order to assist them in making this "representation." After my first class, the concensus was that they either had to (1) go forth with consirable liability exposure, (2) not work with FNMA, or (3) go back to FNMA and discuss these impossible standards.

2. I do not believe associations generally have enough money in reserves to cover large insurance deductibles, such as earthquake insurance. If you remember (those of you immersed in HOA issues), Freddie Mac posed a new requirement - after the Northridge losses - that in order to purchase a condo loan, the HOA had to have the earthquake deductible 100% covered in funds in the association accounts. That did not last long before it was retracted - I believe that would have eliminated the purchase of any HOA loans because HOAs do not have that kind of ability. It would likely make condos unmarketable if the owners had to come up with the assessments to immediately fund earthquake deductibles.

3. The California legislature is being counterproductive to the option of HOAs to invoke amendments that would limit leasing in the developments with the introduction of AB 2259 relating to limiting these provisions. The very reason HOAs consider lease limitation amendments is to counter the FNMA and Freddie Mac regulations that deter the purchase of loans in HOAs with a high percentage of rentals.

4. It seems to me that many new HOAs seeking the FNMA "gold seal" or certification of approval would fail if the number of investor owners had to be less than 10% of the units.

5. If FNMA cuts out the condo associations that are not separately metered, that is a BIG CHUNK of condo associations. Although there seem to be many benefits to doing so, some just cannot afford it, especially in these hard economic times.

6. If FNMA is not going to purchase loans where the HOA is more than 10% delinquencies on the HOA accounts, well, there go more out the door. HOA delinquencies today are doubling, tripling and worse, because of the subprime lending issues, hard economic times, and cumulative effect of California legislation that protects HOA owner/debtors and makes it harder for HOAs to collect assessments. While 10% and under for delinquencies was a reasonable goal a few years ago, it is unreaslistic for many HOAs today.

So, I have to ask the question, FNMA, do you want to buy condo loans or not? Only time will tell.

Posted by Beth Grimm at 12:47 PM

April 28, 2008

WHAT’S NOT TO LOVE ABOUT YOUR NEW CONDO!

How about something upbeat? Because of my new book, I have been asked to write articles for several blog groups. Each has their own preference for content. Being asked to address what is positive about living in a condo reminded me, and might remind you, of the reason many people in California purchase condos.

***

So you are in your new condo! What do you do now? … Enjoy… and if you understand a just a few simple things about what you bought, it make things even better.

A Different Type of Ownership: You probably own what is commonly described as a “unit” which is often further defined as airspace within walls, a floor and a ceiling. It’s similar to owning an apartment but there is much more to it than that. In most cases, you share with your neighbors ownership of everything else, including any pools, clubhouses, all the amenities, and the buildings that house all of the units. Thus, while it may seem strange at first, there can be some real comfort in this. You share the benefits of amenities that would otherwise be quite expensive. And you have others that share in the burdens of decision making and responsibility. You have a group to share maintenance costs, replacement of roofs, insurance, pool repairs, and economy of scale in almost all things. Take heart, owners of single family homes are on their own.

Other Good Things:

“Lock and Go”: When you leave for work every day, or on a vacation for a week or a month, there is still activity (“life”) going on all around your unit while you are gone. It’s usually much more protected than a home sitting vacant, newspapers piling up, no car in the driveway, no lights. It can reduce the risks considerably.

Running the “Ranch”. You have the opportunity to help make decisions by participating in the association governance (as opposed to being under the thumb of a landlord). As an owner, you can serve on the Board, all you have to do is “show up” and you probably will be get the opportunity to serve.

No Lawn To Mow, Weekend Maintenance to Do: You will probably find that you have more time on your hands because your weekends won’t be eaten up by the need to mow the lawn, trim the bushes, or clean the gutters. Yay! Plan that day trip.

Stress Relief. If you do not want to exercise your brain and acumen in helping to make big decisions about the property, you can sit back, relax, and leave it to someone else. Of course, your association is served volunteers so you should take your turn.

You Belong to Something! You are part of a community when you own a condo, a community that is as good as its owners. Meet your neighbors. Talk “across the proverbial fence”. Get involved and be a good pillar.

How To Stay Happy, and Get The Most Out Of Your New Community!

Being a good neighbor will help you enjoy your home and your community. Keeping the noise down to a reasonable level, using your garage for your vehicles instead of storage, lining your drapes with neutral colored liners, keeping your pets inside or on leashes, picking up after them, exercising common courtesies, and safe driving through the complex are things that you can do to set a good example and to engender like behavior from your neighbors. And there is value in having rules and regulations and honoring them. When you live in a condo, it’s true that there are some regulations and restrictions that you would see in a single family home. But if you need help “encouraging” others to be good neighbors, these restrictions and rules can come in handy. The Association can often be more effective than waiting for the fiscally-strapped Cities to enforce ordinances.

Keep these things in mind when wondering.

Posted by Beth Grimm at 9:03 PM

April 10, 2008

How Can Those Guys Do Anything They Want? - The Flip Side

I received lots of messages and even a couple of calls about the blog on free legal advice. Thanks readers! Some were complimentary, thanking me for what I do, and others seemed a little defensive. Truth is, I had no one in particular in mind when I wrote the blog, but I did need to provide some kind of general information about what my own limitations are, because the boundaries seemed to be slipping, and the last thing I want to do is be rude.

To be fair to all of you out there that need help, the following is one of the emails I received:

"I read your blog about homeowners wanting free advice. I hope I have never been one; I have always tried to ask first if my question required legal advice. I understand your frustration; you didn't go to law school to give out free advice; neither would I.

I don't think it is right nor fair for anybody to expect free advice and you certainly have done more than any other attorney with your website answering so many questions.

I do understand a homeowner's frustration dealing with issues of not being able to pay for legal advice, dealing with associations who have no legal representation, along with board members who make their own rules, then state "sue me, we have insurance." I have heard that so many times. And the management company who is giving out legal advice is indemnified by their policy.

The entire paradigm is flawed and I keep hoping and praying for necessary changes that will benefit homeowners, board members, attorneys.... everybody.

Have a nice day."

Believe me, I get it. Many, many, many homeowners are frustrated with their purchase of a home in a homeowners association. Whether frustrated by the neighbors, close living situation, boards, or management, the answers are hard to find. I do encourage questions through my website so I can find out what people want to know and address it on my blog.

This particular message came from a reader who frequents the website and blog, figures out some things by reading the information posted there, and has actually asked for a consultation on some issues. There seem to be many problems with the HOA and management - from this readers perspective, too many to seek legal advice on every one. So the reader submits question after question and many are very suitable to a blog answer. The questions are often common ones and I get feedback from this reader thanking me when I hit one of the questions asked.

Now that is one way to get help. As for other questions, there are not currently enough resources available to help everyone with their issues. It is true that most attorneys who are knowledgeable about HOA law will not represent owners. But there are some. One way to try and find one in your area is to go to caionline.org and find a Chapter in your area (there are 9 in the State). If you are a CAI member you can peruse their directory. Otherwise, you can purchase a directory from your local chapter and start calling all the attorneys in the book and ask them if they, or they know someone else who does, speak with and represent homeowners. Most attorneys will give out names if they know them. And they would know better than I in areas other than the Bay Area, where I am based.

Calling me and asking for a referral in the far reaches of the state will not be fruitful. Mid state, you can contact the Ventura County Mediation Center and you may be able to find someone.

Besides these resources, you can watch 2 bills that have been introduced by California legislators. One involves some incentive for board members to get some education (SB 948) and the other proposes a state omudsman program (AB 567). You can read and watch these bills, and even get on the list for updates, by visiting the state website at http://www.ca.gov, navigating to the legislature and bills, and plugging in the numbers.

While neither of these pieces of legislation is perfect, or liable to come out of the state "legislative grinder" as the be all and end all answer to your prayers, they both have an educational component that if passed, will encourage more HOA education in the state. CAI (the Community Associations Institute) is developing programs for Board members.

On top of all of that, I am working on a third self-help book on condo and HOA living. And there is my recently released national book, which has gotten some incredible reviews about how helpful it is, called THE CONDO OWNERS' ANSWER BOOK. It is available through my website http://www.californiacondoguru.com on the publications page.

So ... if you can just do your homework ... and also hold on awhile, there may be more help on the horizon.

My best ....

Posted by Beth Grimm at 8:16 PM

March 13, 2008

How Should Architectural Review "Appeal" Processes Work?

One of my readers sent in this question about architectural review. He is an architect, working with various HOAs to do architectural review. This is what he has to say:

"My firm provides architectural review services to a number of associations. Some association Boards have a policy of reviewing ARC appeals only to determine one of two things, the applicant is seeking a variance or the applicant is claiming inappropriate procedural actions by the ARC committee. They do not reevaluate the submittal for its subjective merits as evaluated by their architectural consultant and ARC members.

Some association Boards end up reviewing every submittal that was denied by the ARC and expend a great deal of personal time visiting the site and reevaluating the architectural merits of the submittal.

Are there some specific laws that govern the required review / appeal process? Are both doing it right? Is one doing it wrong?"

I am not sure either process is "wrong" because there is no specific definition written in the statute and there might be attorneys who would disagree with me. However, I would interpret California Civil Code Section 1378, since it provides the right of "reconsideration" (as opposed to right of appeal), to mean that if the Board is a different body than the ARC (Architectural Review Committee), and a request for reconsideration is made, then the Board should take a look at the plans that were submitted and analyze whether to accept or reject the ARC's position, or suggest something different (such as conditions).

Here is what the statute says about the subject:

"If a proposed change is disapproved, the applicant is entitled to reconsideration by the board of directors of the association that made the decision, at an open meeting of the board. This paragraph does not require reconsideration of a decision that is made by the board of directors or a body that has the same membership as the board of directors, at a meeting that satisfies the requirements of Section 1363.05. Reconsideration by the board does not constitute dispute resolution within the meaning of Section 1363.820."

One reason there may be confusion about the review process is that some documents provide a right of "appeal" and sometimes that is defined, and people figure it is sufficient under the statute that calls for fair and reasonable processes. However, in the courts the "appeal" standard of review is (very generally) limited to a determination (such as in an owner vs. an HOA case) as to whether the "body" making the decision on the first round abused its discretion, or if there were lower court procedural issues. Therefore, if a Board is reviewing plans in a more objective manner, only to determine if the owner is asking for a variance or is complaining about procedural missteps, the decision to do it that way may relate to some commonality with the court appellate standards of review.

As for my view, I would go looking for a definition, and "Webster's" is a good place to look. Webster's dictionary defines "reconsideration" as "consider again with a view toward changing or reversing." At the National CAI law conference in January, there were a number of cases where the courts in other states turned to the dictionary for definitions that were not apparent in the law or documents being reviewed, so it is not a stretch.

So that's "my two cents worth" on this question ...

Posted by Beth Grimm at 8:45 PM

February 14, 2008

STOP THAT INFERNAL WALKING!

This is my 301st blog! Thought it worthy of some unusual step. Since I have on my plate neighbor to neighbor issues today, I decided to give neighbors their own category on this blog.

So, to kick off this special day, I have more to offer in the way of determining fault, options (or lack thereof) and solutions (to the extent there are any) on issues noise related - namely, to hard surface flooring. By the way, if any of you out there are claiming that you cannot live below carpetted-properly padded unstairs rooms, consider yourself lucky, because there is a whole world of unhappy owners out there living under hard surface flooring, and its getting worse every day because there are more and more and .... (well,. this seems a good place to stop with the madness).

So here is the latest that has come to my attention. Different sources sent me an article entitled "The Case of the Upstairs Condominium" apparently written by a flooring person or an attorney, I am not sure which. None of the parties identified the source of the article (naughty naughty) so I do not know who to thank (except if your initials are DLW give me a call or an email and identify yourself, and I will give you full credit). You may be asking me what a flooring person and an attorney could have in common. The article said that the person had received several calls in recent months from homeowners and homeowner association boards about noise issues related to hard surface flooring. That could be a flooring person or an attorney, right?

Anyway, to get to the point, the article talked about a "test" that can be performed to test "the level of noise transmitted through the assembly ..." of a sound level meter. It takes a specially trained accoustics specialist to read the noise from upstairs created by a specialized piece of equipment called "a tapping machine". This machine, according to the article, imitates the impact on the upstairs floor created by a person walking. The measurement from this test can be expressed as a single number that is called "Impact Insulation Class". According to the article (and by referring to it, I guess I cannot be "blamed" by anyone if this is incorrect information), California's "Title 24 Standards require that floor/ceiling separation assemblies between units in miltifamily developments achieve an 'IIC' rating of not less than 45 when field tested."

So I will add this to my list of considerations published earlier, when one is considering what to do about a noise problem related to hard surface flooring, which (now) is reiterated in a (new) list of questions to ask. As for the HOA, the developer, the flooring installer, or any other party that might be confronted with a noise-flooring issue here are some pertinent questions to ask:

**Is this a pre-existing condition or did something change, i.e., flooring, neighbors, change in family circumstances, residents (number or age), and if there was a change that is now creating a problem, will it be remedied any time soon?
**Are you just the problem, or also part of the solution?
**Did you do anything to cause or exacerbate the noise issue(s)?
**Did you do anything to mitigate or minimize the problems or condition leading to the problems?
**Did any of the parties violate the governing documents in their actions?
**Has anyone arranged for an "IIC" or other flooring impact analysis test to be done?
**Was there any requirement or duty to make disclosures?
**If so, were those disclosures made to the right party?
**Are there any viable solutions that do not involve expecting the impossible, such as moving when economics or life logistics do not allow it?

I cannot say that this "IIC" test will make or break any situation. First of all, I do not know if it is well recognized in the industry and by the courts (feel free to send me info on this). And, I do not believe it is necessarily the end of the inquiry. As described, it presents a test with a minimum standard, and I for one believe that the standards for condos should be higher than apartments because if someone does not like the upstairs noise in an apartment, they can move. They have little to lose. When one purchases a condo, the solution is much more complicated. If they remain quiet, they risk having a disclosure issue come up after sale. If they make noise, they risk creating an issue where one might not be there for the next person. Believe me, peoples' tolerance levels seem to be all over the map - and when "friends" live upstairs, people are much more tolerant than if they have nothing in common with the upstairs neighbors.

But, the saga continues. And I will continue to say that if attorneys continue to tell developers not to put limitations on hard surface flooring un upper stacked units, and attorneys continue to tell HOAs not to put stringent limitations and standards on the installation of hard surface flooring, and owners continue to be discourteous (like placing speakers on hardwood floors and turning up the base, like refusing to try any form of carpet or padded runners in traffic areas, like giving the neighbor who complains the finger instead of listening to what they have to say), the problems will not go away.

Of course, before condemning attorneys, I should say that the attorney does not make the ultimate decision on what goes into the governing document or the rules or standards. The developers and HOA boards do that. In every set of docs I have written in the past 20 years (ugh, has it been that long) that involves stacked units, I have advised boards to put some limitations or restrictions on hard surface flooring in the upper units. More than half, probably more than 90% (I lost count) have heeded my words and done it, but those that rejected my suggestion either could not fathom that it could ever raise an issue, have put property values ahead of human values, or have had or were considering converting to hardwood or laminate floors. Had they put limitations on the flooring, at least, if the HOA did not want to spend the money to sue someone who installed hard surface floors without getting approval, the neighbor below would have a potential remedy for the violation of the documents. However, this sometimes falls on deaf ears.

It seems simple to me. If there is a prohibition on installing hard surface flooring in upstairs units, or there are standards involving installation of cork or some good form of padding below the new floor, or developers go the extra mile to add good and true soundproofing materials below hard surface or laminate flooring, it eliminates a major problem. That problem is the awful situation that occurs when the parties might otherwise be willing to resolve the issues but are left looking at major reconstruction (raising other potentially serious issues) involving both the upstairs and downstairs units as the only remedy.

People. Wake up!

Posted by Beth Grimm at 11:18 AM

February 9, 2008

My New Book is Out!

"Talk about misconceptions and misunderstandings…the homeowners’ association industry involving condominiums, shared amenity living, and shared responsibility is full of misconceptions and misunderstandings. The general public has processed its share from the negative “connotations” and bad press rampantly played out in the newspapers, magazines and tabloids, and even on TV and in the movies. The tabloids love a good “the board president was run over ten times by a resident who was not allowed to wash his car in the common area” story. X-files presented an episode based on a situation where the board eliminated (yes I mean that literally) owners who did not follow the “rules”. And when Jerry Seinfeld’s father became the subject of a nasty recall battle because he was suspected of pilfering association money when seen driving around in a new Cadillac purchased for him by his son, Jerry, the audiences loved it. Children are now exposed to it at an early age with the latest movie featuring “condo commandos” who seem to run the place without regard for the creatures just trying to find a good place to coexist with people.

So, are there answers to the questions and quandaries that arise? Yes, there are."

For those of you who do not know I had written a national book on condo living and the things that inquiring minds want to know ... I did. What appears above is the introduction to the book.

And it has been released, and is available on Amazon.com. The name of the book is "Condo Questions and Answers" and the publisher is Sourcebooks, Inc.

Hope you like it!

Posted by Beth Grimm at 9:39 PM

January 24, 2008

HOW TO "SHARPEN YOUR SAW"

It's Time to "Sharpen The Saw" - It's a New Year and there are some things that we all can do to make this one easier. One of my New Year’s resolutions is to add more “tools” to the “tool kit” to help Boards cope with all of the challenges brought on by complicated laws, hard to understand documents, and lots of responsibilities.

So what solutions might you find to the day-to-day challenges that arise? Where do you start?

First, you might outline all subjects that you think need attention. For example, my list of things to get together includes: book outlines, primers to write, items to put up on the website, list of classes to develop, list of trips coming up, and seminar outlines. What will yours include?

Here are some suggestions:

KEEP AN ONGOING TO DO LIST: Think about it. How can you keep everything you need to do in your head? You need a TO DO list. Why? There are many reasons but one very important one is that it is a stress reliever. If you transfer thoughts in your head to a list, they sit somewhere else for the time being and your mind is not clogged or overtaxed with these things. And they are still there everytime you look at it.

Another very important reason (related to your mental health) is the feeling of accomplishment or achievement each day. It helps keep your spirits up. Many of us do not even realize how much we do each day, until we actually see it! Crossing tasks off the list does just that - it provides a good feeling, a relief, and a sense of achievement. It is one of my favorite tasks each day. And of course, it helps get things done on time and that is important in order to be successful in your work. The absolute worst attorneys, managers, professionals, and board members (or any leaders for that matter) are those who do not get things done on time. They complicate things for everyone else.

CREATE POLICIES and/or CHECKLISTS: The # of laws relating to HOAs in California is staggering. Coordinating laws with the governing documents is a daunting task. You need something easier to work with. It’s that simple! Remember: K.I.S.S. in 2008! I hate to be sexist, but here goes: women will understand this: it is much easier to navigate shopping with a shopping list, rather than taking the recipe to the local market to shop. If you have a list, you will know when you are done, and can avoid the impulse decisions and mistakes. For men, perhaps it is easier to envision the greater ease in having directions to a location before you leave home, (gotta love that GPS system), rather than to have to navigate a complicated (or for those of us over 40 - impossible to read) road map, especially while driving. And who wants to stop and ask for directions anyway? A policy, rule, or checklist may be taking the easy way out, and why not? Here are some types of policies and rules that may help you out, and I am sure you can imagine others.

Meetings/Agenda Policy: The California statutes have many requirements for meetings and the new agenda law that became effective January 1, 2008. To add insult to injury, one has to also compare the governing documents for the HOA to determine what requirements exist for meetings. Things that are important include notice timing and requirements, procedures during the meeting, when and how members can speak (the homeowner forum), what happens if anyone disrupts the meeting, who may attend, and what happens if an item is raised that is not on the agenda for the meeting. A 1-2 page policy on the specific procedures would be a breath of fresh air. This kind of thing benefits not only the Board and management, but also the members who attend the meeting and need to understand the processes. And a policy that includes a procedure for handling disruptions can be given to a member to silence them. Believe it or not, it's harder to argue with a piece of paper than a living, breathing Board President.

Compliance Policy (Nicer Name) or Enforcement Policy/Fines Policy: The laws on enforcement and getting compliance are also quite complicated. There are statutes on fines, disciplinary hearings, IDR (Internal Dispute Resolution), ADR (Alternative Dispute Resolution), filing a lawsuit, suspension of membership rights, and there are limitations on various remedies. And, again, each HOA has governing documents that may add to or contradict the laws. It’s not easy to sort this all out, particularly after a violation needs to be addressed. What is the first step? A policy with timelines and requirements for letters and notices, steps for addressing violations (maybe with distinctions between serious and less serious ones), a fines schedule (which is required by law if any HOA is going to fine any owner), and other remedies that may be considered would sure help. Again, a 1-2 page policy or checklist of steps would be the easy way out - but why not?

Parking/Towing Policy/ and Contract: Last year, we were talking about a new law that made towing vehicles from CIDs seemingly more complicated. As it turned out, it was actually easier to cope with in some ways. The pre-tow notice requirements were, at least in my estimation, clarified and simplified. However, there were other things that indicated the need for a clear and understandable tow policy and a protective contract. The tow companies and drivers were burdened with many additional requirements by the new statutes. HOAs need protection from the risk of assuming any liability from the tow driver’s and tow companies mistakes. The HOAs have to assign someone to be on site to authorize a tow. And that person is responsible for determining when a tow was warranted and legal. It is obvious that the person given authority to ask for tows has to have a list of tow situations that is clear. How does one get such a list?
A good policy...

There are many other subjects that might be worthy of a policy such as maintenance responsibilities, satellite dish placement and screening, architectural standards, reserves savings and investments; cross-protections from embezzlement and fidelity issues, check authorizing and signing limitations, and maybe a Code of Ethics for Board Members. I am sure you can think of some too.

CREATE RULES: Much of the discussion on creating policies applies likewise to rules. In many cases, the distinction is difficult to describe. Both contain regulations of one kind or another. But a different analogy for rule-setting might work better. Think of the fact that most of society is willing to live within reasonable parameters. There is a troublesome “fringe”, to be sure, but most want to act responsibly and get along with those around them. So let’s focus on the masses for a moment. If people know what is expected of them, they are likely to accept it. And if the rules are written in a positive vein as opposed to “you can’t do this” and “you can’t do that”, even better. And, the truth is that while neither owners or tenants (or maybe even board members) will ever read the CC&Rs, most will at the least read the rules.

I suggest you make a New Year’s Resolution to make your life easier, through the use of a TO DO list upon which you might place the following: “Develop checklists, policies, and rules on these subjects: ... blah, blah, and blah (add your own).”

And check out my website at http://www.californiacondoguru.com for the January E-Newsletter with more on this subject, and watch for upcoming notices of classes, publications, WEB CHATS, and other tools that are and will be available in the coming year.

Posted by Beth Grimm at 9:30 PM

January 10, 2008

Who Is Responsible for Unsavory Guests?

One of my readers had some questions about responsibility in an HOA. I thought they might be of interest:

1. Who is responsible for adults or other people who visit my children when they are in my home?

An Owner of a unit or lot is responsible for the actions of anyone that resides in or visits their property. The responsibility can also flow to "uninvited" guests as it would be assumed that these guests are on the property because of the residents or visitors of your home.

If these visitors cause a nuisance or destroy property or cause injury and they are identified with a particular unit, it is possible that the Owner of the unit or lot could be held responsible.

2. Do the neighbors have any standing to sue me and try to take my condo away from me for unsubstantiated rumors?

The process to sue and "take someone's condo away" would be involved. In talking about neighbors, and not the Board, the neighbors could file a lawsuit for nuisance or any other viable cause of action (such as if an injury to property or person) was brought. If a neighbor was able to get a judgment, attachment of property is possible, but probably not likely, unless something really eggregious is involved.

In talking about association action through the Board, failure to pay assessments might lead to loss of a unit through foreclosure, but fines if imposed are not a proper basis for foreclosure.

If any owner allows any drug activity in a unit or home and there is criminal activity discovered, an owner could lose their home to the authorities as real property can be seized in some cases, under federal law.

Sometimes threats are tossed about on all sides in a difficult situation where a threatening or unsavory element of society is present, and sometimes things are just overblown. But it is important for owners to understand that whomever they place or allow in their home or on their lot, or whomever they draw into a homeowners association by virtue of the residents or guests of their home can get them sued or arrested - so it is important to pay attention to these kinds of issues.

I have seen many situations where owners placed tenants that were involved with a criminal element that became a real problem, and then the owners wanted the Association to solve the problem, when it was really the owner's responsibility to do the "cleanup" of the situation.

In any given hearing or court proceeding, the outcome will be based on what the hearing officer or judge believes. A hearing officer will not believe unsubstantiated rumors; however, in a civil court, all one party has to prove is that it is more likely than not that a situation occurred, which can be proved by circumstancial evidence. And there are elements of a case that need to be proved, such as, in a nuisance claim, that there is a nuisance, and in a property damage claim, that the perpetrator was the cause of the damage. These are simple paraphrasing of what can be complicated legal claims and theories, but intended only to make the point that due process requires proof of some kind (to be believed by the board, the hearing officer, judge or jury) before disciplinary action or legal punishment can be imposed.

So it all comes down to proof that is offered and what the hearing officer believes.

3. What can I do to protect myself from further harassment or legal action?

The best thing to do in the event an owner is worried about what might happen because of visitors to the residence is to have the visitors meet residents of the home outside the complex and/or seek legal counsel to assist and help assess the situation.

Posted by Beth Grimm at 8:58 PM

December 17, 2007

Are You Being Defamed? You Don't Have to Stand For It.

I earlier posted a blog that said boards and owners had no right to exert or threaten physical violence against each other - using the axiom "Sticks and stones may break my bones but words may never hurt me."

I feel that I should take this a step further because words can actually hurt a person. I stand by my earlier post that physical violence or threats are not the answer to words that hurt, damage the reputation, or misstate someone's intentions. But a decision does need to be made about whether to do something about such words, or "turn the other cheek."

In our world of homeowner association living, associations generally have access to legal counsel, and the funds to pay for it collected through assessments from all owners. Individual owners do not enjoy this kind of access. First of all, at least in California, most lawyers with considerable HOA knowledge and experience will only represent HOAs and not homeowners. There are many reasons for this, fiscal and otherwise, but that is not the purpose of this blog. The fact is that this creates a lot of stress for the owner-public that is unhappy with its homeowners association and cannot get help. And so, owners tend to be a lot more critical of the Board and individual directors, and the Association vendors, than the board is of the individuals.

Some owners go overboard in their frustration and defame the board members, the Association and sometimes the Association vendors, managers and attorneys in particular. How far overboard can they go without risk?

In California there are statutes that define defamation and guarantee certain rights. Civil Code Section 43 is one. It says:

"Besides the personal rights mentioned or recognized in the Government Code, every person has, subject to the qualifications and restrictions provided by law, the right of protection from bodily restraint or harm, from personal insult, from defamation, and from injury to his personal relations." Defamation includes libel and slander (Civil Code Sectiion 44)

Civil Code Section 45 and 45a define and explain libel which is "a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye, which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation."

Civil Code Sections 46 and 47 define and explain slander which is "a false and unprivileged publication, orally uttered, and also communications by radio or any mechanical or other means which:
1. Charges any person with crime, or with having been indicted,
convicted, or punished for crime;
2. Imputes in him the present existence of an infectious, contagious, or loathsome disease;
3. Tends directly to injure him in respect to his office, profession, trade or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires, or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profits;
4. Imputes to him impotence or a want of chastity; or
5. Which, by natural consequence, causes actual damage.

With regard to defamation, 1, 2 and 3 above are important because if a person says or publishes something that says another person is a thief or embezzler (for example), is mentally ill, or is incompetent in serving the association, the subject of the comments may be able to sue for slander and get a monetary damages award without having to prove monetary losses.

This happened in a case in Colorado and an HOA and Board members received a judgment in the amount of $10,000 because of an owners comments published on two websites that publish a lot of criticism about homeowner associations, boards and vendors that serve them, especially attorneys. The Judge also issued an injunction that prevented the owner from (quoted from order of judge):

"1. Publication in any manner or forum, including, but not limited to, the news media, letters to editors, community newsletters, and internet and blog postings of the name of the B Lazy M Ranch Owners Association, the names of its property owners, or the names of its past and present board members;

2. Publication in any manner or forum, including, but not limited to, the news media, letters to editors, community newsletters, and internet and blog postings alleging criminal conduct, civil wrongs, and mental and/or psychiatric conditions, which refer directly or indirectly to the B Lazy M Ranch, the B Lazy M Ranch Owners Association, its property owners, or its past and present board members;

3. Communication by any means, including but not limited to, e-mail, letter, telephone, or in person with any member of the B Lazy M Ranch Owners Association, its property owners, and its past and present board members which in any way alleges criminal conduct, civil wrongs, or mental or psychiatric conditions by any past or present board member of the B Lazy M Ranch Owners Association."

Furthermore, the judge found that enjoining future conduct would not remedy the fact that there were communications published on the two websites that were defamatory and issued this order as well:

"Within 15 days of this Order, the Plaintiff shall contact the American Homeowners Resource Center, the Gazette YourHub, and any other internet website or blog on which she has posted contributions and shall request that all postings made by her which identify or name the B Lazy M Ranch Owners Association, the names of its property owners, or the names of its past and present board members, be removed from said website or blog. Within 30 days of this Order, the Plaintiff shall file with the Court and provide copies to opposing counsel proof of compliance with this Order."

The judgment in this case may be affected by an appeal, if one is filed, and so I will try to follow it and let you know of changes. I will also be posting more information on addressing defamation, as it is a "tort" (civil wrong) and there are remedies.

In all cases where I have been called upon to advise boards, or groups of concerned owners, I have always recommended that the best defense to any defamation claim is to publish facts, and not innuendos, accusations, suppositions, hypotheticals, or assumptions. "Just the facts, M'am." I always say that if you are going to publish something derogatory, that you need evidentiary support for the truth of what you are publishing. If I am asked to draft a communication, I require that the backup information be produced for me so I can verify the truth.

It is interesting to find, as I do in my experience, that the more outrageous or offensive the allegations about HOAs, boards, or even owners when the tables are turned are, the less believable the allegations are. The conduct of producing unfettered criticism without any substantiation with facts can generally be fairly easily countered with a subsequent publication of the facts, if the audience is contained enough. The other thing I see a lot of is someone says something unflattering about another, or, criticizes the other person by sending them (the target person) a communication, and the person assumes they have a defamation claim. The item or comment or statement has to be said or publishes to "someone else" to be defamation. Criticising a person to his or her face is not defamation, unless there are others in earshot and the comments are defamatory.

One last suggestion. If a person feels they are defamed and cannot afford an attorney, he or she can test his or her theory in small claims court in California for a filing fee of about $25, a service fee of $10-$30 or so, and a court appearance. Say an entire board is accused of stealing or embezzling funds through a publication by an owner. I believe that each board member could file a small claims complaint alleging defamation and seek up to $7500.00 (the small claims upper limit) in damages. If a plaintiff is successful there, the perpetrator (defendant) should be deterred from continuing to publish defamatory materials. In fact, based on whether the conduct is so eggregious it could make the"six o'clock news" [a "test" conceived, I believe, by Mary Howell, an attorney in Southern California], the hearing officer is likely to issue fair warning that future publication could result in subsequent multiple damage awards. The more offensive the text, the more likely it is to get the judge's attention and evoke sympathies for the person that is the subject of the derogatory comments.

The small claims remedy is often overlooked but in the hypothetical described, it seems very possible the small claims venue could be an affordable means of addressing defamation. It may not offer the "injunctive" relief (although I believe a hearing officer could issue sufficient warnings to practically effect an order to do or stop doing something), but it is an available venue. In the Colorado case, the HOA and board members were given a $10,000 judgment but I do not believe they recovered attorney fees and I suspect the fees probably equalled or exceeded the award. One has to consider the economic feasibility of pursuing litigation if one does not have the funds to fight based on "principal."

Posted by Beth Grimm at 9:52 PM

December 14, 2007

Would You Like To Win The Next Argument - Or At Least Be Heard?

If you want to win an argument with someone, you may need to try some real tactics - in order to be heard - because that is what it is about - being heard. I am going to concentrate a few messages on this topic, because I expect to be teaching and writing on this subject often in the months ahead. Here are some tactics that tend to work, if there is any chance of having a decent exchange.

One: Let the other person spout off some during the discourse. You cannot get through to someone who is filled with anger, righteousness, indignation, or a burning desire to be "heard"! Once that someone has had a chance to rant (no punching or slapping allowed though), they are as maleable as they are ever going to be and while they are coming up for air - it's your turn.

Two: If you begin to sound like a broken record, you need to STOP IT! - even if you feel you are 100% RIGHT AND THE OTHER PERSON OR EVERYONE ELSE IS 100% WRONG. People will simply become immune to your message. If you shake up your message or your approach, or both, that will probably take the someone you are fighting with or the everyone who disagrees with you by surprise, and may even result in getting someone to listen.

These tips are not for my edification - they really work! You can develop your own listening skills, but if the person on the other side of the table has none, then you have to help them out. It's that simple.

Posted by Beth Grimm at 1:59 PM

December 10, 2007

Bah Humbug - Don't Be A Scrooge, Now or the Rest of the Year!

"T'is the Season - Help Owners Figure Out What They Can Do - Rather Than Focusing On What They Cannot"

That is the theme of my latest E-Newsletter. It relates to "Holiday Displays" and other means of expression.

My feeling is that ... "If Boards would just stop with the jerk "bah humbug" reaction and think about it, there must be a feasible proposal for holiday and other displays in any type of HOA that is fair to all residents. People need a reservoir of joy. There is not enough of that going around."

The E-Newsletter focuses some on the law on "Signs, Flags and Banners … and the Like" - in California, which says (Civil Code Section 1353.6) that “... governing documents, including the operating rules, may not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in an owner’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.”
The law goes on to say that “… a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of the separate interest, but may not be made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or include the painting of architectural surfaces.”

Okay, it is true that the statute says signs, flags and banners may not be made of lights or, basically, other things that are tacky or may cause damage to the buildings. But I provide a reasonable suggestion that could be refined for most any association that has common area buildings: “Non-twinkle lights may be strung on the balconies so long as they are not nailed, stapled, or glued to the building surface in any manner, and so long as they are not left on past 10 pm. All lighting must be supported by proper outdoor and GFI protected cords.”

This offers protection along with the opportunity to express joy for the season.

So consider telling owners what they can do and see what happens. You can go through the rules process to refine this, and include everything they can't, which sometimes makes the Board look like a scrooge is among them, or simply provide a catchall that says, if you don't see it here, don't do it!

And read the E-News, sign up so that you can get it on a regular basis, and enjoy! ... Just visit me at www.californiacondoguru.com, enter the site, and click on E-Newsletter Archive for the December edition and much more.

Posted by Beth Grimm at 11:12 AM

Ballot Revocation - Is it Legal in California?

Here is an elections question commonly asked: "Based on the new [California] election law, how can a homeowner change his ballot selection AFTER it was mailed?"

The new law found at Civil Code Section 1363.03(f) which states: "Once a secret ballot is received by the inspector of elections, it shall be irrevocable."

However, that is not necessarily the end of the inquiry. If the governing documents allow for proxies, and a proxy giver revokes the proxy before the election, then there is a dilemma that needs to be solved, because proxies are revocable. So I think at that point the issue is whether the proxy holder obtained a ballot for the proxy and sent it in, or not. Civil Code Section 1363.03(3) on proxies says: "The proxy may be revoked by the member prior to the receipt of the ballot by the inspector of elections as described in Section 7613 of the Corporations Code." So there is a period where the proxy giver can revoke the proxy (although it should be done in writing) and obtain and send in their ballot or deliver it as specified by the Board.

This is not revoking a ballot, but needs to be explained because of confusion in the new law relating to proxy use and how it fits with the new double envelope secret ballot procedures.

And there are other pertinent questions that might be appropriate. Were the owners mislead or was incorrect or inadequate information provided on the measure when they got their ballots? Is that why they want to revoke?

Maybe there is a good reason to consider allowing owners a second chance at the apple. If "damage control" is needed to head off an election challenge or additional steps are needed in the election process to be fair to those who are voting, then I say, consider the facts and circumstances before giving an opinion as to what to do in any given situation.

Posted by Beth Grimm at 10:52 AM

Who Fixes What When There Is A Common Area Landslide Into A Townhouse?

Here is a not-so-uncommon question of a nature that involves figuring out who is responsible when a problem starts in the common area and "flows" into the private areas of a townhome development.

I own a small lot in a PUD. A landslide occurred in the common area that resulted in damage to the structures. The soil in the common area of the Association gave way and that resulted in a landslide that slid into the townhouses. I am very concerned about the stability of the soil and also want to know who fixes what. The hill behind our complex is very steep. This slope is owned by the association and is part of the common area. Does the Association have legal responsibility to clean up the townhouses, repair the soil in the common area and stabilize the hill behind my lot?

This is obviously a complicated question and there are many factors that may come into play. Any owner or association that finds itself in this situation needs the assistance of some good experts in soil and in legal responsibility aspects. The parties may need coverage counsel to sort out responsibility of another party such as the insurance carriers.

These are the documents that need to be examined as they will dictate (for the most part, and hopefully) who is responsible for what portion of such an event:

The governing documents of the association: In California, the Bylaws, CC&Rs, Articles of Incorporation and any rules or policies related to repairs and maintenance responsibilities need to be examined. One would be looking for areas of responsibility with regard to repairs, insurance required, and maintenance responsibilities.

The insurance policies: The HOA and each individual owner should have insurance coverage for events like this. The HOA policies would generally cover the structures and the owner's policies would generally cover the belongings and often the fixtures and decorations, possibly the flooring and wall covering. One would be looking for primary coverage vs. secondary language, exclusions that may apply to the situation, covered items, and language relating to litigation defense (and whether the limits include defense costs or they are outside the coverage limits).

Expert reports: The cleanup, repair and stabilization efforts are all very involved, too involved for a board member or contractor without hillside stabilization, geological and/or engineering education and experience.

The Board of the HOA will probably direct efforts related to the hillside cleanup, repair, and stabilization. My guess is in most cases the documents will require it. The owners may have responsibility entirely for the inside of their dwellings and any personal property that was damaged (patio furniture, backyard pool equipment, etc.). The question of ultimate responsibility depends on the document review and expert opinions noted above. If any of the parties feels the other is more responsible or responsible for a portion of the development or private townhome than the documents say, then the next question is: was there negligence or intentional conduct that caused the landslide, or did any party fail in a duty or obligation to do their part to protect the hillside stability or the private yard and home areas?

As you can see, this is not an uncomplicated issue and there are many factors that need to be considered. Boards members can get some protection from liability for the decisions that need to be made by consulting the right kind of experts. In legal terms, this is a component of "good faith" that is required in order for the Board member to get some legal "insulation" from liabiity needed to minimize their risks in making decisions.

Posted by Beth Grimm at 10:24 AM

December 1, 2007

The Effect of the Mortgage Crisis on California HOAs

I received this email from my local Assemblymember (Mark DeSaulnier) via email, today.

"Homeownership is a source of tremendous pride and an important milestone on the road to achieving the American Dream. Unfortunately, many Californians are facing the possibility of home foreclosure due to unforeseen circumstances and events. During this crisis, my office is committed to providing you with the most up-to-date information and resources.

The Assembly Democrats are working on legislation to address the current mortgage crisis. For more information, please visit http://adc.asm.ca.gov/issues/MortgageCrisis. The information and organizations listed on the website may help you, your family and friends through these difficult times.

If you have any questions, please feel free to contact my district office at (925) 372-7990.

Sincerely,

Assemblymember Mark DeSaulnier"

This was my response to him:

"Dear Assemblymember DeSaulnier: I work in the HOA industry and the mortgage crisis is creating a homeowners association crisis as well. The delinquency rate in HOAs is increasing drastically, which makes it very hard for an HOA to operate without collecting extra money from those that are able to scrape by to make up the deficits.

What is being done to protect homeowner associations? You know that they support the infrastructure in California by bearing much of the burden for streets, sidewalks, parks, drainage systems and recreational facilities passed on to them by the municipalities.

Beth Grimm,
HOA Attorney and Resource Partner
www.californiacondoguru.com"

It's very scary folks. The subprime lending fiascos trickle down to the entire populace, including those signing on for loans that are able otherwise to bear the brunt of their own debt. If the burden created by overencumbering property with debt remains on the debtors and lenders and others that are trying to find compromises and workouts on the difficult loans, that is one thing. But we all know that as Californians, we are going to have to pay. In HOAs, it is very likely that all owners, assessment paying or those ducking the debt, are going to be hurt by the times.

So a fair question it is certainly fair to ask: What is being done for the HOAs that are suffering because of purchasers who hold no equity and can't afford to pay their loans?

Posted by Beth Grimm at 3:39 PM

November 30, 2007

MOLD, MOLD AND MORE MOLD - Why Do You Let It Grow!

I got 5 calls this week on mold related issues. Most were from homeowners. They all related to water leak issues. The owners who needed help ranged from one who was facing a nearly $50,000 special assessment for clean up after a water leak in his pipes to one that was waiting for a stalled process of repair initiated by the HOA. Many HOAs have been working for the past few years to take steps to minimize the Association's risks overall (by engendering homeowner accountability and responsibility) when a leak occurs in an owners unit and that leak causes damage to the units of the neighbors below. Isn't it sad that the innocents who live below the incident suffer the most!

Even HOAs that have done the footwork necessary to spread some of the risk by making owners who allow leaks to occur over long periods of time for various reasons carry more accountability, and that have pushed owners into realizing they should also purchase insurance to protect themselves from liability from leaks and to restore their portions of the Units need to remain vigilant!!

Understand that if the Board of an HOA responds to any leak situation with the quip: "It's not our problem," those words may come back to bite - hard!

My approach with HOA Boards is to encourage owners to call when a leak is discovered in any condo or townhouse situation (yes - I said any condo or townhouse situation), to immediately investigate and start the work of creating documentation of the issue, whether it be to send someone out to assess what needs to be done, or to do it. Not all attorneys agree with my suggested strategy. Some tell boards to stay out entirely if a leak occurs in a townhouse where the owner owns the "lot".

In any event, the Board should use and suggest contractors, and consult knowledgeable and experienced vendors and lawyers who know what needs to be done in these situations.

It is important to note that even if the governing documents say an owner is responsible for the damage from leaks, if there is any possibility the leak involves the neighbors, the common area, or the association insurance coverage, all of which might involve duties or responsibilities of the Board ... the Board needs to know exactly what happened and needs to demand, or commandere, action to stop the "hemorrhaging" that occurs in the form of mold when a leak is left unattended.

Any given incident can escalate from a $2500 repair to a $50,000 repair, and beyond, and, when something is left to fester out of control, all parties involved, the HOA, the owner, the HOA insurance carriers, the owner's insurance carrier, and the adjuster all start to point fingers. It is then that a now $50,000 repair can escalate into a hundreds of thousands of dollars legal battle.

The moral of the story - act quickly and with the right kind of help! Document everything that you can. And do not bury your head in the sand as it leaves your *** exposed.

Posted by Beth Grimm at 11:14 AM

Blowing Smoke - It Could Become Harder to Find a Place to Do It.

Are you suffering from cigarette or cigar smoke infiltrating your unit through a ventilation system or wafting its way up to your deck when you are trying to enjoy a very fine California sunny day? Should you have to suffer?

I think not. We are on our way to an even healthier environment thanks to proactive municipalities and, as time goes on, more and more proactive HOAs. We have to temper our actions with the times, but the times, "they-are-a-changin."

People across the country are getting relief. I wrote earlier about a Colorado case where the court upheld an HOAs right to enforce a prohibition on smoking in the common area and to address the nuisance caused by second hand smoke. An owner challenged the ban and lost.

At this time, I am writing about laws, ordinances and regulations closer to home. In October of 2007, the City of Belmont passed an ordinance regulating secondhand smoke which may be one of or the toughest in the US on smokers. The ordinance defines a reasonable distance from areas in which smoking is prohibited, and implements a 14 month phase in period for those multi-unit buildings that are included within the purview of the ordinance. It is not a strict prohibition for smoking in multifamily buildings but does address ramifications when neighbors complain about the smoke. The Belmont City website has an entire page on smoking and the issues and you can go there to get links to many places with excellent information about smoking, the damage secondhand smoke does, and where to get guidance and help. Some of the information presented includes this: "The California Air Resources Board (CARB) in January 2006 declared environmental tobacco smoke (another term for secondhand smoke) a toxic air contaminant." The site includes links to such things as:

Press Release Related to 2006 Declaration: http://www.arb.ca.gov/newsrel/nr012606.htm
Fact Sheet Related to 2006 Declaration: http://www.arb.ca.gov/toxics/ets/factsheetets.pdf
Link to Smokers who would like to quit helpline: http://www.californiasmokershelpline.org/

Talk about proactive!

I remember several years ago when I flew back home from the East Coast. There was a group of young Europeans that got off the plane behind me. One said, "I need a cigarette." His companion replied, "I don't think you can smoke in California." I had to chuckle at this.

Maybe we are getting there?? I used to be a smoker. I quit many years ago, not because of anyone harping on me (although my kids did a good job of it). I found that the less convenient it became to smoke, the more it became a stressful experience, instead being the stress reliever I had convinced myself it once was.

One good thing, it's no longer "cool" to smoke - at least in most circles here in this progressive state. Take a look at the older Hollywood movies and you will see a change - very few of the newer movies glamorize smoking ... we've come a long way baby.

Posted by Beth Grimm at 10:27 AM

November 28, 2007

It's Christmas ... Have a Heart!

Some people love Christmas. Some hate it. Some Boards encourage holiday spirit by holding neighborhood contests for the best displays. Others discourage it by putting the nix on all displays. Sometimes there is good reason but usually, if a director is willing to stop with the jerk "bah humbug" reaction and think about it, he or she can come up with a feasible proposal for displays in any type of HOA that is fair to all residents.

Christmas has become complicated, hasn't it? What is politically correct and what is not? At my grandchildren's school, they don't call it Christmas anymore - everything is "holiday". It's darn hard to remember, not to say the "C word" when you grew up on it.

But alas, yes, a more tolerant and sensitive world would be wonderful.

So let's start it off during the "holidays". Let's try to allow those who want to celebrate do it up right! The sooner you put out some positive feedback to the members, the sooner you will deter the undesirable or overboard conduct. Yeah, I know, there is a requirement of circulation of rules before adoption (30 days) that puts you into January. But maybe there is no preadoption circulation for giving owners some guidance as to what not to do so that buildings and roofs will be unharmed, what to do with windows, doors, and other things that would not be considered a nuisance, and if you want to put it into rules, get the jump on next year.

What can residents do and what are they prohibited from doing? That is the first question people commonly want to know. If the answer is nothing, and then everything, then I urge you to try again.

All I am saying is "Don't be a scrooge" ... (maybe that is politically incorrect too). If you give residents some reasonable parameters, they will likely honor the limits. There may be those wishing to "make a point", but I have to believe that the more reasonable a board is in allowing those who wish to join in the holiday spirit, that those who unreasonably push the envelope will stand out like a sore thumb and have a hard time convincing the news reporters that they are subject to bullying and too-stringent rules.

Happy Holidays everyone! (I am one of the believers that this is the best time of year.)

Posted by Beth Grimm at 12:23 PM

November 19, 2007

Angry and/or Frustrated Person Strikes Again in HOA

I wish the following things did not happen. In the past few months I have received emails from owners who have been threatened by board members in a physical way, board members who have witnessed other board members in physical altercations with their fellow board members or with an owner or resident, and board members who have been threatened with physical violence by members of the association, or their tenants or family members, "better ?? halfs", or the criminal element drawn to an association by a resident. I, myself, received a threatening call from a person who turned out to be a board members mentally challenged son, stating that if I came to a meeting up in the outreaches of Northern California I would be chased all the way back to the County line.

What's the matter with people that they believe physical or other threats are appropriate, or worthy, or justified, or rational, or even any kind of solution?? They almost always escalate matters (unless of course the recipient is knocked out, in which case the matter cannot escalate at that moment, but probably will at a later time).

All kidding aside, this is one of the recent notes to me:

"The President of the Board of our HOA struck a member during a heated discussion. Even though the President may have been provoked, I believe the person should be removed from office. What do you think?"

Well, yes! Of course, ... any officer that strikes someone should be removed from office immediately, by the other board members. If the matter involved self-defense, then get help now either from the police, or an HOA attorney, or both!

Any person that holds any position of authority or leadership for the association, including board member, director, manager, vendor, etc., (that has a propensity toward violence or disrespect toward others) is a serious threat to the HOA, not only because of the propensity toward physical violence or other inappropriate actions, but because of the exposure to liability for the actions of that person, through vicarious liability allegations.

Board members and others in a position of authority must exercise restraint, learn some people skills, and live the old addage: "Sticks and stones can break my bones but words can never hurt me." In my book, there is no excuse for hitting someone when a board member is supposed to be acting as a board member (or any other time for that matter).

I except self defense, consistent with the law, which is just enough force to protect yourself or your family, or your property. But if the situation has arisen, it needs attention.

Now you might get a different answer from someone in ... say, ... Texas or Wyoming or in some area of the country where people feel that they may take liberties and fight back in a physical way or with physical threats - but not in a civilized society. Maybe some people consider this appropriate. I read in newspaper right here in California several years ago that at a board meeting in a CID in California, one board member threatened another by telling him or her that he/she (I cannot remember what the sexes were) that the board member had a gun in a shoe box in his closet at home and knew how to use it. Of course, it may not be prudent to quote a newsstory as they are not always correctely reported, but since this was an HOA that had asked me to come and interview with them, the story caught my eye. I declined the interview by the way.

The person who wrote to me about this incident also asked: "Is there a process whereby the Association President can be removed or impeached?"

The other board members can remove an officer from office, in most cases. It depends, of course, on what the bylaws or other governing documents allow. And this, in my opinion, should happen immediately. Removing the person from the board is another story. Recall elections are quite dicey and difficult under the new HOA election law but it is not out of the question. Legal assistance is probably required to get through the maze of laws, and it is not inexpensive. The members can remove a board member from office this way, but the Board cannot do it alone. And HOAs and HOA members must be extremely careful in dealing with recall so as to avoid defamation claims against them. Allegations made publicly better be true and provable, or other issues arise.

A board or member could seek removal of a board member from office by court order (not a cheap process, but perhaps a good choice in some situations), and this situation probably would qualify as far outside of the board members's good faith or capacity as a board member. At the least, in any situation where a board member is threatening physical violence, acting it out, harassing or bothering others, the board should meet with the director, take him or her out of "office" if the documents allow, consider a removal election if the circumstances warrant it, and, next time, calling the police might be in order.

Do you all know that striking someone can lead to a battery claim, both criminal and civil? Do you know that threatening someone in a manner that leads them to believe you will harm them can lead to an assault charge, criminal or civil? Early on in my days as a legal assistant to my brother (who went on to become a San Francisco Public Defender), we had a case we called the $5,000 punch. A civilian was cut off in traffic, and he got mad. He followed the 20-somethings back to their apartment parking lot, drug the driver out of the car and broke his jaw. The "victim" sued the person that called upon my brother to defend, and the "case" settled for $5,000, probably a good deal for the defendant. We always wondered if the punch was worth it.

It is more serious for HOAs as they can be perceived as a deep pocket, the same way as employers often are, and like employers, the entire HOA can pay for the indiscretions of a board member or manager. Thus, the HOA leadership needs to take charge of and deal with situations like this before they get worse, and neutralize parties that may lead to the type of claims identified here.

Posted by Beth Grimm at 10:24 AM

November 18, 2007

Board Meeting Disruptions - What Can You Do?

Board meeting disruptions are a problem in some associations. Here is a recent question sent to me: "Isn't there a law which protects homeowner meetings from being disrupted? Something that allows members to phone the police?"

Unfortunately, there are few laws that protect the association from troublemakers. Most laws that have been passed in the last few years are for the benefit of homeowners, and provide them specific rights, but there are no laws that protect board members or other owners from those meeting attendees who disrupt the proceedings. There are many things the board can try, to get past a problem like this. Adoption and circulation of a policy outlining the discipline that may be imposed for meeting disruptions is one. Use of a Sergeant of Arms may help. Threatening to adjourn the meeting and recommence behind closed and locked doors is one. Video taping meetings sometimes helps. In any case, to find out what your documents allow, and speak with a knowledgeable HOA attorney to get good advice for your association. The methods I suggest are just some of the things associtions that have consulted me have tried. Some worked for one situation, but not for another. When I advise an association, I ask for a lot of details about the "disrupters".

And in any case, you don't need a policy or law to give you permission to call the police. If someone is out of control and unwilling to listen to reason, and you or the Board feels they are a threat or danger, or a trespasser, or unwilling to leave when asked, it is appropriate to call the police.Sometimes the police are responsive and helpful, and other times they are not.

Posted by Beth Grimm at 10:07 PM

November 16, 2007

CRIME IN NEIGHBORHOODS - CAN YOU POST "NEIGHBORHOOD WATCH" SIGNS?

I commonly get questions about what to do about crime in neighborhoods. There are often various conflicting ideas about what should be done. Here is a question related to a group that wanted to get a neighborhood watch going but met resistance from the Board. The Board's concern apparently involved losing important liability protections including insurance coverage that might flow from helping the owners with the NW program. The Board may have been concerned about encouraging "vigilante" activities. As usual, there are many facets to the question of how far a Board should go in trying to prevent crime, and maybe even, how far the Board should go in "encouraging" owners and residents to act. Here is the question:

QUESTION: Does the Board of Directors have the right to refuse the posting of Neighborhood Watch Signs? How can five members of a board be in charge of the safety of a large residential community?

ANSWER: There are considerations above and beyond the simple question of whether the Board can prohibit the posting of Neighborhood Watch signs. As a simple answer with regard to the question of posting signs (IN CALIFORNIA), it would be my belief that the sign law (IN CALIFORNIA) would allow owners/residents to post neighborhood watch signs in their windows as they would qualify as noncommercial signs and banners which the board may not prohibit. My understanding of the NW signs are that they are small, and usually placed in the windows of the people who participate in the neighborhood watch, so those folks can identify each other, and if someone is in distress they can feel free to go to one of those houses. The law says:

“1353.6. NONCOMMERCIAL SIGNS, POSTERS, FLAGS, OR BANNERS; PERMITTED PLACEMENT OF POSTING OR DISPLAY; EXCEPTIONS.

(a) The governing documents, including the operating rules, may not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in an owner’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.

(b) For purposes of this section, a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of the separate interest, but may not be made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or include the painting of architectural surfaces.

(c) An association may prohibit noncommercial signs and posters that are more than 9 square feet in size and noncommercial flags or banners that are more than 15 square feet in size.”

Now, as to the Board's duty to respond. In my experience with communities suffering from high or increasing crime rates, the more the owners and residents are watchful and can provide meaningful information to the police, such as descriptions of vehicles and people, timing of unwelcome foot or vehicular traffic, etc., the more likely the community is to get the "better" of any criminal element that may be lurking. The movement has to come from the people, the Board cannot fix the problem alone. Criminals tend to move out of a community if the heat on them becomes too hot. If they know they are likely to be watched, they will commonly go somewhere else.

On the other side of things, the posting of these signs tends to lead people coming into the development, perhaps with purchasing a home in mind, to believe that there is significant crime, so it can be a deterrent to sales, and thereby affect property values.

That said, the Board is not "in charge" of stopping crime. But it does have some responsibility toward the members as a "fiduciary" (person or entity in charge of the assets of others).

My approach would be to advise the Board that it is appropriate to afford those who want to get involved in a NWP with a venue, and have someone attend the meeting who has expertise in dealing with community issues like this (someone from the PD and perhaps an experienced lawyer, and some communities have a person who helps groups prepare small claims court cases to present locally) to explain to those present (board and residents) what sort of things are allowed with the NW and what are not (such as vigilante type of activities - threatening, cornering, approaching or fighting with those who come into the neighborhood intending bad activities). It is important to advise the Board and members that the Board is not charged with stopping crime, but rather, that is for the police. However, it (the Board) does have some duty to warn, and I believe arranging for a town hall meeting for the purpose of discussing the issue and allowing the neighborhood watch to operate and allowing the placement of signs helps meet that burden. If there are identifiable specifics or patterns in activity, then there may be more that is needed. If the criminal element is drawn into the community because of a resident, the group may want to look at the "mass owner/family/resident small claims remedy for nuisance". I do not believe that the insurance in place to protect directors would be problematic, unless of course a board member harassed or shot someone or took some action that was outside the scope of a board member's reasonable duty.

Posted by Beth Grimm at 9:17 AM

November 8, 2007

Move In - Move Out Fees - Are They Legal?

This question came in recently:

"Our board recently increased the move-in and move-out fees and the board will collect [more than $600] for every change of residents in a given unit. I question this fee as being out of line with California Civil Code requirements that fees not exceed the costs of that for which they are imposed. Is this legal?"

I get asked this question by clients and non-clients. Sometimes boards do this and really believe it is the best way to go, or claim the money is for repairs after residents (owners or tenants) move out. Some believe that tenants are the problems, and will not acknowledge that owner move-in move-outs can be just as difficult. If I ask about what repairs were needed as to the last move, or the one before that, or the one before that, I commonly get a blank look. In other words, boards cannot often identify damages that justify the fees. If a Board was challenged on them, I think there may be a need to justify them. If the CC&Rs have such a fee, it might be easier to defend, but boards who adopt these kind of fees in the rules can run into problems trying to enforce them. There are certainly cases where they are justified, such as a case where in a high rise, special security measures might need to be implemented that cost extra money for the Association. Perhaps special parking arrangements have to be made (such as in San Francisco) that result in extra costs. If there is a situation where there is an extra cost, the fee could be justified. Maybe there are extra administrative costs (but do they justify a $600 or $700 or more fee?

Now, what is a board to do about a situation where a tenant (or an owner for that matter?) damages common area when moving in or out? The answer would be found in the governing documents, and it might be in the form of a reimbursement assessment, an individual special assessment, or a damage assessment.

I would go for the "damage" reimbursement for the guilty parties, rather than a flat fee, unless there are extra costs that arise when tenants move in or move out, or have a fee for everyone if the extra costs apply to everyone.

Not all attorneys agree with me. But I think many do.

Posted by Beth Grimm at 10:06 PM

October 26, 2007

Agendas - How Important Are They? What Role Do They Play in Meetings?

California legislators are micromanaging HOAs again. A new law takes effect January 1, 2008, that requires HOA boards to distribute agendas with meeting notices. The catch, the Boards cannot conduct business on any item not on the agenda, except for the exceptions. Here's the short scoop. The longer "scoop" with more questions and answers and ramifications is in an article on my website at www.californiacondoguru.com.

What's the short scoop?

To be specific, first of all, it applies to board meetings, not membership meetings. The requirement for distributing the agenda is tacked on to the meeting notice requirements found in Civil Code Section 1365.05(f).

Question: What if the notice of meetings is in the Bylaws or Association newsletter and that comes out before the agenda is set? Answer: Find a way to distribute or post the agenda at least 4 days before the meeting. That might be with the billing statements when they are mailed, in the newsletter if the timing works, or by posting in the common area. It would be a good idea to include another copy of the notice with it, even if it was already distributed. It may not be necessary, but it makes sense.

Question: What if the HOA does not have any common area to post in? Answer: That is a little more difficult. You can mail the agenda, post it by the mailboxes if there are any clusters, put a kiosk up somewhere near a street if there are private streets, a parking area if there is any, on a street lamp, or anywhere there is space available, that you can get permission. Choose the place all owners are most likely to drive by. If you still cannot find a posting place, but you have a website, posting on the website. Use good faith to try and find a reasonable way to get the agenda before the members.

Question: What are the exceptions? Answer:

 The law applies to “nonemergency” meetings only.
 The law does not prevent the Board or its staff or agents from talking to the members about something not on the agenda. It is not muzzled by this law.
 The law allows Boards to communicate instructions to its management and staff.
 The new law allows for taking action on items that come up before/at the meeting that are not on the agenda if certain findings are made as follows (choose from any one of the following)::

(1) A majority of the board members present at the meeting determine that an emergency situation exists.
(2) Two-thirds of the members present at the meeting, or, if fewer than two-thirds of the board members are present, by unanimous consent of the members present, determine there is a need to take immediate action.
(3) The item was on an agenda for a prior board meeting (within a month prior) and did not get put on the agenda for the meeting when it comes up again.

If these exceptions do not work, consider whether it might be more practical to call an emergency board meeting, even if to take place just before the scheduled board meeting or after, to address matters that come up before the meeting but are not on the agenda. Check my website for more information as time goes on. There may be a debate over what (2) actually means.

The statute says:

"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)."

It appears to me that the legislation was written incorrectly and that the #2 was meant to refer to members present that are not actually board members (however, for all practical purposes, the directors are also "members". The first reference to 2/3 of the members, and then the reference to 2/3 of the membership of the board, is confusing, and it is quite difficult to analyze why the reference to (note bolded words) "membership of the board" is even in there. I will be writing to the legislator who wrote the bill for an analysis of what this means, and wonder if that will lead to "clean-up" legislation.

There are many other questions that have arisen and they are answered on the most recent article posted to my website at http://www.californiacondoguru.com/hoarticles/articles.html. Look for “Articles” or “What’s new?”
.

Posted by Beth Grimm at 11:06 PM

October 23, 2007

Management Companies - How Much Power Should They Have?

I get a lot of emails from homeowners who are unhappy with management. Of course, it is predictable if the owner is commonly in trouble for breaking the rules or thumbing their noses at management or the board. (Yes, there are those kind of owners.)

But there are situations where management may have too much power. Here are some comments and questions sent to me, and my thoughts on the matter:

"Our current Management Company just simply came in and took over for the previous Management Company without any notice or approval from the homeowners. They took over 2 months before they even had a license to manage a cid. They had said we had no say in the matter since we had no board of directors, they have been friends and business partners of the previous manager who by their own admission was mishandling our funds. Can they do that?"

First of all, a manager or managing agent has to be hired, retained, or contracted to do work. If a managing agent comes in without a contract or written employment agreement, that company or individual does not have the right to perform services, and does not have guidance, protection or authorization to incur costs. And if there is no board, my question would be who is signing the checks? A manager cannot make decisions for an HOA, write their own ticket and sign their own checks, unless of course there is a court order involved, and the person is acting as a receiver, appointed by a judge, which is in fact something that could happen if there are no board members. However, someone would have had to initiate that process. Without it, the owners could call an election and elect a board. Or if there are any board members at all one, two or more could appoint additional board members to serve.

If no one is willing to step up and serve the association as volunteers to end this situation, then I have little helpful advice to offer. I can see why it would be disturbing, and I can imagine that finding volunteers to serve could be difficult, but there are no miracles here that can solve this dilemma. If there is no board to hire, who is going to fire?

Here is another one:

"My question is about Management Companies. Since the Board of Directors is liable and has a fiduciary duty to the association, how much power and authority should they give the management company? How much power and authority should be legally granted a management company? After all, the management company has a vested interest ($$$) to keep the contract. What I have seen over the years is the board relinguishing most control and relying on the manager, and this is what the manager wants. Also, since most board members don't have proper education and knowledge about HOA law, then how do they know whether what they are doing is legal? If all correspondence goes to the manager, then who monitors what the manager does with the correspondence (i.e. letters from attorneys)?"

This is the classic story about how an HOA gets to the point where the manager does more than just manage, by default more than anything else. The answer to the question about whether the board knows management is acting legally is that the board may never know if it operates in a void. So, attending industry group classes, reading up, looking for information, checking references and using good business judgment are things likely to help give a board member some insight as to how things should go. And the answer to the question about who knows what the manager does with correspondence is no one, unless someone is either watching, or has instructed the manager to forward all communications to the entire board. However, there are boards, such as those described herein that want their burden lifted, that may not want to be "bothered" with correspondence.

Here is one more:

"In our condo association our Management Company has full control; the only exception is signing checks with no co-signature. I believe the Board of Directors allowed this to happen without knowing what they were doing. The Manager talked them into refusing any HOA correspondence from any of the homeowners and routing everything thru him, which "could" be filtered. The only thing that the board members do is attend meetings and make decisions based on advice from the Manager. The Manager has told the Board members that they don't really have to know anything about HOA laws and also gives legal advice. Our association has no legal representation."

I received these comments, no questions attached. I have to assume there was a question somewhere in this like: "What can we do?"

I would say, run for the board, campaign, get elected, attend industry functions, read journals, articles, the web, and get involved. However, there probably is a reason the question was not asked. Because the most common answer to that kind of a suggestion is: "I don't have time."

So what else can I say? ... If no one in the HOA steps up to the plate, it is hard to complain to a court or anyone else about wrongdoing... there is little anyone can do. Is it better if an attorney steps in and directs the activities? Or directs the manager? Or gets rid of the manager? What then? ....

All I can say is stop being part of the problem (the complainer) .... and become part of the solution (offering volunteerism and/or leadership services to the association).

Posted by Beth Grimm at 10:46 PM

October 20, 2007

Clotheslines - Don't Get All Tied Up About Them

Clotheslines are becoming a big issue in HOAs. Most CC&Rs prohibit any kind of clotheslines in HOAs. Big surprise. Most developers assume that people to not want to look at laundry hanging on the line. Most attorneys assume that people do not want to look at laundry hanging on the line. Many boards assume that owners do not want to look at laundry hanging on the line. Many people assume that if clotheslines are allowed, the next thing will be clothes hanging over balconies, over fences, and everywhere. Laundry, laundry ..... everywhere.

There are those who are pushing to change this, in fact pushing for legislation to prohibit associations from having such restrictions. As the energy crunch continues, one can expect the supporters of clotheline options to keep pushing.

Here's a thought. In a planned development with single story homes and back yards, why not consider whether to survey your owners to see if they would approve clotheslines in back yards that do not exceed the fence height? If the members surprise you (suggesting that the majority have no problem with the use of clotheslines), then you could take the next step and get the requisite approval for a CC&R amendment, or propose a rule, circulate it to the members, and approve it.

I certainly can understand and anticipate that the general public probably does not want laundry hanging out on balconies, in front yards, over patio fences, and even in yards when homes are two or more stories and people can't help looking down into yards. But, there are those that would not have a problem allowing people to have clotheslines where they cannot be seen without peering over fences. In fact, there are those that would like to have the option of hanging their laundry outside to dry, not just because it saves power, but because it feels good, and makes the clothes and sheets smell good.

If resistance to reasonable energy saving processes continues, it is reasonable to anticipate that at some point in the future, legislation will force acceptance. It has with solar installations, drought resistant plant requests, and it is conceivable clotheslines could be next.

Posted by Beth Grimm at 10:12 PM

October 11, 2007

"GOOD STANDING" - WHAT IS IT GOOD FOR?

What does "good standing" mean and why would anyone like it?

These are my thoughts on the subject - "Good standing" means current with regard to payments of assessments and not in violation of any governing document provisions, including the CC&Rs and Rules. A "good standing" requirement is great - for board member service. If the Bylaws or CC&Rs provide for it, it assures that the Board sets a good example for the membership and respects the obligations of the governing documents. If the documents contain a "good standing" requirement for candidacy or service on the Board, a Director who does not qualify or falls out of "good standing" can be "ousted".

As to voting, it is my belief that requiring members to be in "good standing" to be allowed to vote complicates elections and due process procedures within the community. Generally, my experience indicates that members who violate the regulations or fail to pay assessments don't care if their voting privileges are revoked (and generally don't even bother to return ballots - although they may attend meetings just to stir up issues). However, I have seen situations where important measures are before the community and a sizable contingent of the community that is in violation of some requirement wants to vote it down, just because (because the members do not agree with anything the board does in some cases). In that scenario, it might make sense to have the right to deny the recalcitrant members the right to vote.

However, that leads to the question about what due process is required before an association board can impose the good standing requirement to disenfranchise members. Some documents do say that members of the association lose voting rights if they are behind in their assessment payments. That may be appropriate for "automatic" discounting the votes, but I do not like it. Other documents allow boards to suspend voting rights if a member is behind in their assessments or in violation of the rules or CC&Rs. Well and good - it would be my position that a hear