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

July 7, 2008

MORE ON PARKING - WHAT RULES ARE RIGHT?

I like it when people email me their questions and concerns. It gives me the perspective of both sides. There would be fewer disputes in the HOA world if people could see clearly in all directions, and have some understanding and compassion for others in their own actions, whether a director or a homeowner or anyone else.

Here is the latest comment on parking:

"There was some good reading on your blog about condo community parking (where, how, ethics, etc.), so I thought it would be helpful if you could provide information about what HOA's can't do as far parking rules. In my community, they banned all residents from parking anywhere but their garages. I understand that residents cannot park in the visitor parking places, but they banned the street as well. This makes myself as well as many others upset mostly because we have tandem 2-car garages (one car in front of the other). So its nice to be able to use the street to park the car in front temporarily while we use the car in the back of our garage. So while there is no other parking literally for miles, I guess my question is: Can they banish residents to only use their garage for parking and not provide any other places at all?"

They can, and do. HOA Boards that have to deal with a lack of adequate and convenient parking have to do something to control parking, or it can easily get out of hand. Of course there are boards and board members that abuse power, and I believe it is fair to acknowledge that.

However, the problem above started with tandem parking. Whoever invented that? Of course its inconvenient. And it causes all kinds of problems. Why have it? ... So more can be crammed into a smaller area, obviously, which means more bang for the buck for the persons who created the "footprint" and plan for the development.

Who pays? The citizen who buys there. Is that fair? Did you not think of the ramifications when purchasing?? I am guessing not. So whose fault is it? Who should pay?

If the HOA lets people park on the street temporarily, people will park on the street permanently, and if there are set hours, people will move their cars every so many hours. If a lot of people park on the street, a lot more will start parking on the street. People will think since there is plenty of street parking, its okay to have extra cars. I can almost guarantee that will happen over time. And HOAs that did not start controls early in the game, which left open the door to parking expectations, can develop big problems. And those problems become the owners problems. Bumper to bumper street parking has occurred in many HOAs where parking is limited - and especially where tandem garages were implemented to save space.

That said, the HOA gets its authority for parking and other rules from the governing documents. If the documents say that the streets may be used for parking or that the open parking spaces are restricted to non-exclusive use, then the documents control what can be put into rules on those points and the HOA Board should not adopt rules that conflict with the language.
If, however, the documents say that the Board can adopt rules related to parking in the development, then that controls over what the owners might want.

That's the best answer I can give you. My experieince is that Boards that come to me for advice generally tend not to adopt overly restrictive rules until there is a good reason. In some cases, I may be the culprit by suggesting more rules than they have, simply because I have seen many times what a lack of restrictions in the areas of people, pets and parking can lead to over time.

I would be surprised if anyone got "nailed" for parking on the street just long enough to move cars around in the garage, but if someone wants to run off to the store, the movies, or the park, while parking the car that is usually used more often on the street, then I assume there could be ramifications for that .... and right or wrong, you out there can be the judge of that. I imagine your sympathies will come down on the side of whichever problem you face ... wanting to park your car on the street at times for convenience ... vs. having to look at and maneuver through a crowded "parking lot" on your street every day.

Posted by Beth Grimm at 11:04 AM

June 30, 2008

LIMITING RENTALS IN CIDS - MORE ON THIS SUBJECT

There are some lease limitation cases going on here in California and also in other states that I am watching. I am in the process of rewriting my article on my website called "Lease Limitatiton Amendments - Are They Legal." Here are some of my thoughts on the subject:

I have always felt that a good clause that can be supported by objective reasonableness should uphold, and they have - but I have always believed (from reading the cases from all states that I could get my hands on)- that there are at least 2 mandatory criteria:

1. the necessity of grandfathering current lessors until they transfer their property (from a vesting rights viewpoint)
2. the necessity of providing a hardship clause (from a reasonable-ness standpoint)

The legislative moves across the country (which closely align to what California legislators are looking at) have proved this out focussing on the issue of "consent" by owners.

The last formal survey on rentals and the effects and subseqent study I know of was the 1985 DRE commissioned study that showed (through a rather small sampling but maybe adequate at that time), that there tended to be more problems in high percentage rental developments). Experience for boards proves that to be true again and again.

One rendition I heard about with regard to the California legislation that is proposed (SB2259) was that it was triggered by a complaint that a man that was called into military service was denied the right to lease his home during his tour of duty, because of a lease limitation provision.

I have discussed this with other attorneys in California. Some attorneys complain that if the limitation says 30% the HOA can not not approve a hardship request because it would make the units unmarketable via purchase by FNMA or Freddie Mac. Others like me believe that that is a perfect example of a hardship that should be approved.

Attorneys are polarized on these things. Boards are put to quite a task these days in considering financial hardships. Something occurring frequently today that did not seem to be as prevalent an issue last year (before the subprime and other mortgage crisis and economically difficult times) is that more and more owners could not be pushed over the brink when they could otherwise pay their assessments if they could just rent their units. In an HOA where the delinquencies have gone from 10% to 40%, giving owners a boost that would enable them to pay the assessments makes sense. The approval might be tied to keeping the assessments current if an owner claims if they can rent, they can pay. Just an observation, not legal advice.

This is a very topical issue and I am very appreciative that it is being discussed, and it is encouraging to see that the trial courts are upholding these clauses. However, it will take only one bad apple to spoil the batch in California. We could be on the brink. One board could screw it up. And since the new election laws are closely tied and controlling in any election to amend documents to add a lease limitation clause, I could see an association messing up the voting process, so be careful!

I wish the HOA attorneys best of luck with these cases because there is a need for a remedy to keep rentals in any HOA from getting out of hand.

However, ... a word of caution. Those of us who truly understand the need, the cases, and the right way to do things believe leasing limitations are and should be legal and they are (if well written) and should be found reasonable under the circumstances. But most of the rest of the world (including my former real property law professor) either believe they are an unreasonable restraint on alienation, or think they are "discriminatory" or "unconstitutional" (a favorite claim of anyone challenging the HOA restrictions, whatever they may be).

Just my thoughts. I would like to hear yours.

Posted by Beth Grimm at 10:27 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 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 19, 2008

California Overregulation is Overburdening Small Associations

There are many small associations in California that cannot afford management. The Davis Stirling Act is intended to regulate HOAs, and the average person cannot comprehend a lot of what is in it. Yet, the legislators keep passing more complicated laws. And furthermore, the California Law Revision Commission has worked on an entire new Davis Stirling Act, that is longer, and in some cases, simpler, and in other cases more complicated. Still, average persons will not be able to self-regulate without doing their homework, committing to learning what is needed to run the association and trying to understand the laws.

I get emails almost every day from some of the smaller association Boards who are overwhelmed with all of the laws. Some even are bold enough to write that they intend to ignore one or another of the laws - and this comes up a lot with the new complicated election laws. I mean, can you imagine being a member of a 4 unit HOA, and having to go outside the association to find an inspector of election to receive the 4 ballots (because all of the owners are ineligible to serve as inspectors), open the double envelopes on each and announce the election results of the Board election each year?

Here is a recent email from a frequent reader.

"Beth, I agree with your comments on the micromanaging by the legislature. We are just trying to have our lawns mowed and pay our bills. As the treasurer of our small HOA (I am also a CPA), we feel overly burdened by Davis-Stirling. We are entirely self managed and this compliance is too time consuming. I envision a point when no one will want to be on our board."

Touche! I agree.

Well,I am here to help after all. I know you do not want to pay me over $300 an hour to hold your hand, so for those of you who want help, check out http://www.californiacondoguru.com, the publications page. You can purchase THE DAVIS STIRLING ACT IN PLAIN ENGLISH and many other affordable Plain English tools at very low prices. Also, if you spend the time to peruse the website, you can get a lot of information for free. When people call or email me and ask if I know a good resource for gathering information about HOA stuff, well, I have to ask myself if they just did not take the time to look!

My best...

Posted by Beth Grimm at 9:33 PM

Who Has To Fix The Fence?

Here is a question I recently received on maintenance of fences in a Caliornia HOA.

"I own a SFR and I live next to an easement/common area owned by our HOA. During the winter, a portion of the fence blew down due to heavy winds. I believe the cost of repairing the fence should be shared by us and the HOA.

We live in California and according to California Civil Code 841: adjacent landowners equally contribute to maintain walls and fences between them, unless one of the two landowners chooses to let the remaining sides of his property remain unfenced.

However, the HOA sent us back a letter stating that according to HOA's CCRs, the HOA is not responsible, but I am responsible for the fence and its maintenance and repairs.

My question is doesn't California Civil Code supersede any HOA by-laws?"

MY ANSWER: Sometimes the law controls and sometimes governing documents control. If a law says "Notwithstanding the declaration [or governing documents] ... blah, blah, blah, the word "notwithstanding" bacially it means it doesn't matter what the governing documents say - the law controls. If the law says "Unless the declaration provides otherwise," ... the words "unless the declaration provides otherwise," mean that the declaration would take precedence.

In this case, the law (Civil Code Section 841) says neither. In fact, it is not even in the Davis-Stirling Act. It is in a section of California law that simply codifies some "common law" principles.

In this case, California law relating to property restrictions and equitable servitudes is more specific to the situation and it prevails. (It's a bunch of legal jargon but what it means is that since there is a more specific law, and an agreement that binds properties and commits owners to property restrictions, it controls - it is more specific to the issue.)

I am not providing a legal opinion here because I have not been asked to review the documents or provide one. While it is fair to say that the governing documents will control with regard to fence maintenance, I did not review them to figure out how the allocation on party fences (those shared by two property owners) is made. HOA CC&Rs often have regs on party fences, and then the question has to be answered as to whether the fences between the common area and a separate interest lot are treated as party fences would be (shared expense),as common area maintenance is (HOA expense), or as the sole obligation of the owner of the Lot.

Posted by Beth Grimm at 9:06 PM

May 15, 2008

CAN HOMEOWNERS GET BALLOTS BACK?

FINALLY, I get a brief question that is easy to answer. From a reader:

"A brief question if I may – In an HOA vote [ 2 envelope system ] on an assessment; can a member request the return of a ballot previously mailed to the management company if the request is made before the ballots are opened? …. or is this return precluded by law?"

California Civil Code Section 1363.03 provides that ballots are not revocable once provided to the Inspector of Election. So the easy answer is that an owner is not entitled to get their ballot package back - in California any way.

The statute itself is unequivocal in its terms, but that is not to say that there can be NO exceptions. Facts or circumstances may occur that could affect that premise. Some examples might be fraud, coercion, mistake, or other issues related to voting materials. So I never say never.

Posted by Beth Grimm at 10:32 AM

May 13, 2008

Is There A Stranglehold on HOAs in California?

Imagine that you own a business. Imagine that the legislators keep passing laws that make it tougher and tougher to collect for the goods or services that are offered. Imagine that your earning capacity is limited to collecting just enough money to budget for the coming year. Imagine then, that the bills (and bad debts of other customers) keep mounting and your ability to increase prices for your goods or services is limited, in fact, imagine that you have to go to your customers and ask them to approve any increases.

Imagine that you are a volunteer trying to run this business. Then, as icing on the cake, imagine that you have to tell your customers that they have to pay not only for their goods and services, but those purchased by their neighbors who cannot pay because they have gotten themselves into an upside down financial dilemma.

Imagine all this, and then imagine how long your business would survive and until it folded, how unhappy (AND uncomplimentary!) the customers would be.

Now, imagine how that translates into running an HOA in California. Boards are required to collect assessments sufficient to pay the bills but are limited in increases (Civil Code Sectiond 1366 and 1366.1) They are limited in collecting unpaid assessments by Civil Code Section 1367.4, meaning they have to wait to exercise serious collection remedies until the owner is REALLY in debt. The HOAs have to spend considerable sums to collect the assessments that remain unpaid by owners. The Boards have to continue to maintain the properties and pay the bills in spite of rising construction costs, increased costs in insurance, increases in management costs because of compliance requirements, increases in water and utility costs, increased legal compliance costs and on top of all that - these volunteer Board Members trying to run these ailing "'businesses" have to put up with Board bashing by the members who do not want to pay more.

HOAs take a bath (meaning lose thousands of dollars) every time a lender forecloses on a property in their development, which is occurring more and more often - and which is often stalled by the Lender's own processes. In this day and age of 100% plus lending, there are usually insufficient proceeds from the sale by the lender to pay the Association's lien. And guess what? They (the Boards) have to go to the other owners and ask for more money to make up the shortfalls, which include maintaining those owners' properties that have gone into default or bankruptcy.

How can one expect an HOA to survive in this day and age? The members have to pull together to make them work. Support is needed, volunteers are needed, everyone has to bite the bullet. And shooting the messenger is not nor has it ever been the answer to a crisis situation.

When you talk to your legislators, remind them that there are many of you who live in HOAs that are suffering at the hands of the ever tighter collection laws (making it difficult to collect debt). There are many states that have what is called a "super lien" in their state law, meaning that HOAs can collect up to 6 months of delinquent assessments from a lender that forecloses, even if there are not enough proceeds to cover the debt. California HOAs could benefit from such a lifeline, but the legislators in power will not hear of it. What state does more to protect the lenders and banks that make the "creative loans" and put people so abundantly in homes they really cannot afford? I would truly like to know.

Posted by Beth Grimm at 10:11 AM

April 28, 2008

LEASE LIMITATION PROVISIONS – WHAT IS THE LEGISLATURE DOING IN CALIFORNIA?

AB 2259, introduced by Assembly Member Mullin, most recently amended the ASSEMBLY on MARCH 28, 2008, places limitations on enforcing lease limitation restrictions. The bill, if approved by the Assembly and Senate and signed into law, would amend Section 1368 of the Civil Code (which relates to disclosures upon sale) and would add Section 1360.2 to the Civil Code which would provide protection to owners who are in opposition to leasing restrictions by giving them vested rights (explained below) that except them from approval of rental limitation restrictions by the necessary percentage of members.

The legislature put this language right in the bill: “SECTION 1. The Legislature finds and declares that the rights of common interest development owners to rent or lease their properties, as the rights existed at the time they acquired them, should be protected by the State of California, and the rights of subsequent owners should be governed by the status of those rights at the time they acquire them.” Of course, they are talking about lease limitation restrictions in this bill, but this wording signifies many lawmakers’ mindset, i.e., that restrictions in the documents should be frozen in time for each owner, which is in direct opposition to a long string of appellate case findings that uphold amendments to the documents based on the premise that when an owner purchases in an HOA, they do so with the understanding that the documents can be revised and changed by a majority or supermajority of owners.

More specifically on the issue of each Owner’s rights, the bill says: The right of an owner in a common interest development to rent or lease his or her separate interest, as vested at the time the ownership began, shall not be restricted during the duration of ownership, except as provided in subdivision (b).” Do you see what this means? The word “vesting” means that each Owner would be protected as their rights to lease cannot be changed after purchase.

The only exception would be that an owner could waive their “vested right” described above, under Section (b) of the statute, which says: “(b) An owner of an interest in a common interest development may waive the right related to the renting or leasing of an ownership interest vested in the owner at the time ownership commenced, pursuant to procedures established by the common interest development to facilitate the a waiver.”

This means that the HOA could adopt procedures giving owners the option to waive their rights. Such a waiver could be written in as a “grandfathering” of all current owners which is sometimes done, though not all attorneys agree that it should be done. It would seem to resolve the issue of any owner who does not want to be subject to the restriction. Watch the bill, it may change. At this time it is not an outright prohibition on leasing restrictions but that could change. There are many that oppose the bill, including the CAI California Legislative Action Committee. Others are proposing amendments.

This is a controversial bill, on a controversial topic. Watch my website (http://www.californiacondoguru.com) for updates on the blog, and check out the current article about "Lease Limitatiion Amendments - Are They Legal In California?" Also, I will be doing an E-Newsletter on the subject so go to the website and sign up to receive it – its free! And it might be an indicator that if a Board is considering proposing such an amendment, now might be a good time. The bill if signed into law will change things.

Posted by Beth Grimm at 10:41 PM

April 2, 2008

CONTRACTS - CAN WE SEE THEM?

In California, homeowners in HOAs have a right to review most if not all of the Association contracts ("executed contracts not otherwise privileged under law" - Civil Code Section 1365.2). Unless the vendor has forced a clause that says its contract is confidential" for some reason (which might not be legal but as yet is to the best of my knowledge "untested" in court), then an owner has a good case for reviewing the contract.

However, there may be a reason to take a close look at the contract before it is made available for review and/or copying. It is important to "redact" (black out sufficiently so it cannot be detected) any information that could lead to identify theft.

Posted by Beth Grimm at 9:32 PM

March 10, 2008

What Controls in HOAs - the Documents or the Law?

Below is a question I received from a reader in the State of Washington. While I cannot answer anything that might be perceived as giving legal advice in another state, I can give a practical answer to the question:

"Which controls, the governing documents or state law?"

My answer is a common "lawyerly" answer. It depends ... on how the law and the governing documents are written. In California, if you see the word "notwithstanding" preceding a provision in the law, that generally means the law controls over the governing documents.

An example of this would be a law that says, "Notwithstanding anything in the Declaration, the Association shall maintain the .... and the Owners shall maintain the .... ." On the other hand, if the law says: "Unless the Declaration otherwise provides, the Association shall maintain the ... and the Owners shall maintain the ...." and there is a clause in the Declaration on the subject, then the Declaration would control.

You have to be careful though. Civil Code Section 1366 is a prime example of a difficult law that is hard to interpret. It says:

" Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, quorum means more than 50 percent of the owners of an association. This section does not limit assessment increases necessary for emergency situations."

This kind of language even gives lawyers fits. What it means is that Boards can raise assessments up to 20 percent each year, and can impose special assessments that do not exceed 5% of the budgeted gross expenses, without a vote of the membership. If a vote is required, the approval requirement is a majority of a quorum and for this purpose, the law controls as to quorum, and not the governing documents.

Would you have interpreted the statute that way? Wouldn't it be nice is the answers were as simple as black and white?

Posted by Beth Grimm at 8:46 PM

March 8, 2008

Setting the Record Straight on Homeowner Forum

I wrote a blog awhile back about homeowner forum time. An owner had written in and said that the Board was requiring homeowners to fill out information cards before the forum time and they had to state their name and the subject of their comments. The owner found this very offensive, and I would too, if the motive was improper.

Thus, I wrote the blog from the perspective that if the Board was doing this in order to censor the comment, that would be inappropriate, as there is nothing in the law that allows the Board to censor homeowner comment in the forum time.

Luckily, and feeling much like Dear Abbey now, I received a few emails from board members in response to my query for information on the topic, explaining why they require comment cards, and it makes sense. They want to be able to verify

(1) That the person speaking is actually a member of the association, and
(2) That persons speaking on the same subject matter can be grouped in the forum.

I believe this is a very good idea. And so I stand corrected and admit that new information has changed my perspective on this topic.

And, lest anyone think that my views on freedom from censorship should allow members to act out, threaten, cajole, defame, or make a general arse of themselves, well, that is not true. It is always my assumption in answering inquiries that people will be inclined to be civil. But of course, that is a rose colored glasses view of the world. I will say that anyone speaking on any subject will be much more likely to get more of the right kind of attention if they appear rational (as opposed to highly emotional - making people wonder if they are thinking straight), prepared, pragmatic and civil.

For those that are interested, I am reading a very good book called "Choosing Civility" which is about "The Twenty-Five Rules of Considerate Conduct". In the Foreward, the author, P.M. Forni, who is a cofounder of the Johns Hopkins Civility Project says: "Civility is a wonderfully effective tool to enhance the quality of our lives."

If anyone stopped for a moment and thought about this, in any HOA situation, it would make sense. It applies equally both ways in any communication. Why? Because people tend to react in the same way they are approached. If you lead with anger, you are likely to get it back. The same goes for leading with impatience, distrust, disdain or contempt, or, as a contrast, compassion, kindness, consideration, understanding and acknowledgement of position, even when you do not agree with the points being made.

Really people, everyone could try a little harder without breaking a leg.

Posted by Beth Grimm at 8:57 AM

February 20, 2008

More on Noise - Can a Developer Be Held Responsible?

Just today, during my HOACHAT at noon on issues including noise and hard surface floors (which is a free offering you can join on Wednesdays through my website at http://www.californiacondoguru.com) one of the "attendees" asked: "Can a developer have responsibility when there are noise issues through the walls and floors of a condo?

Noise is a problem in many stacked and wall-to-wall condos. Sometimes alternations and modifications are made by owners in condos that were not meant for hard surface floors. But that is for another blog.

Sometimes a developer will tell you that space is left between the walls of the adjoining condos and that reduces the noise (well, sometimes they will say it eliminates noise transmission but I think that anyone - including me - that has lived in such a condo situation and fell for that line knows better). Sometimes the developer will say, "Sure choosing the laminate flooring upgrade is fine because we add soundproofing," and you think - "Great!" ... And you buy, ... and then experience - "not so great results." I wrote an earlier blog suggesting that the extra money developers collect for installing laminate or hardwood floors in stacked units or townhouses should be placed into a fund to be used later to mediate flooring noise issues. Maybe this sounded like a "flip" comment, but ... why not?

And the answer of course is "Yes", a developer can have some responsibility. And that is apparently what happened in a Colorado case back in 2005. The case took place in Arapahoe County Colorado and it is reported that some of the residents were awarded punitive damages against the developer (as much as $150,000 each, plus costs of trial) and others settled with the developer before the matter came to trial. The owners' attorney's name as reported is David TeSelle. The articles say that the developer had to outfit units with soundproofing materials

I am not representing that this case controls anything in the legal arena, and there is always more to anything than meets the eye. If there were lots of big cases granting damages for noise pollution, builders and architects would have moved noise control to the top of the list of concerns. It does not appear to me that this has occurred, because the noise complaints continue to rage all around the state and in fact, in the nation. I have not located appellate level cases on this subject but feel free to send me some if you read this and know of some so I can add them to my musings.

But I am saying take heart, anyone can be sued for anything, and (hopefully) in matters that escalate to litigation, the culbable party or parties will be "outed" and have to compensate those that are wronged or taken advantage of. I am a California attorney and do not know Colorado law, or the particulars in the Arapahoe County case; however, further research could be done if one wanted to find out more.

My point in discussing this case and this topic is to say that developers need to get on board. And owners need to speak up, to the developer, to the homeowners association, and to each other, if there are noise issues in your building (unless, of course, you want to "move out quietly").

If you visit http://rismedia.com you can find an article about buyers and sellers combatting noise issues, and the gist of the article is that condo builders and architects should take heed. Certain building design and construction is critical if one wants to seriously reduce or eliminate noise transmission between the units.

The article says that while developers or architects might at first refuse to make noise isolation issues a priority because of the cost, they may come to their senses the next time around and spend the money, if they are plagued with complaints from the residents of a building they were responsible for. The article acknowledges that "Quiet does not happen by accident, it has to be engineered ..." and suggests that when you are thinking of buying a condo, it makes sense to set up a sound test, like making sure the neighboring toilets are flushed, the jacuzzi tub next door is filled (and I assume the jets are turned on), the neighbors walk around in their usual foot attire, and run televisions and sound systems.

Nice thought, but it could certainly slow down sales, in more ways than one, especially if potential buyers are given access to current resident neighbors. Short of such a comprehensive test, I think it wise to make sure you have the opportunity to go into a unit during the day, and at night as well, that is next door to a condo with active kids, even if it is not the one you are slated to buy. There is a probably a very good reason that "models" are often built close together and often isolated from the "inhabited" condos or townhouses.

Is it fair to expect a noise-pollution free environment in a condo or townhome? Maybe, if you are willing to pay a premium for it, but in most cases, probably not. But it should be fair to expect that you will not hear the neighbors whispering, talking at low volume, getting a drink of water, having sex, watching TV at a reasonable volume level. If you want more protection, ask developers about the construction of the walls, floors, and ceiling, and whether there is any vibration reducing construction, and write it down, and then talk to an accoustic specialist. This bit of information might help you if you want some more comprehensive research before buying. And accoustics specialists can also be located on the web.

Noise isolation and control may be moving up the priority list of amenities, and well it should. New technology encourages wall mounted window sized TVs, and surround sound systems.

Noise disputes are never easily resolvable, and they make people do things they would not otherwise ever consider doing! And worst of all, they make people sick! If you do not believe me, visit http://newscientist.com and read the articles including one entitled "Hidden Harm from Noise Pollution". In the article which appears in issue 2365 of the New Science magazine, December 22, 2007, the article claims: "Noise kills in much the same way as chronic stress does, by causing an accumulation of stress hormones, inflammation and changes in body chemistry that eventually lead to problems such as impaired blood circulation and heart attacks."

Now, don't get me wrong because while I am saying that noise pollution or transmission disturbances in condos and townhomes can be insidious and must be taken seriously, I also believe that all parties should work toward resolving the issues by means other than litigation. Just because there is noise, and just because it is disturbing, that does not mean there will be big bucks in your future. Visit earlier blogs to help sort out how culpability might be determined, and do not expect that this will be the last blog on the subject.

Posted by Beth Grimm at 8:54 PM

December 30, 2007

Getting Relief in Small Claims Court

I receive many many emails every week from individuals who have a story to tell about their boards, and board members who have a story to tell about other board members or owner misconduct. Some are continuing sagas of perceived misdeeds for many years. Sometimes the person writing to me is right. Sometimes an association has been very poorly managed. Sometimes there actually is theft, misuse of funds, embezzlement etc. Sometimes to get there an owner has to be persistent and enforce their rights to review records via authority in the Civil Code (Section 1365.2 to be specific in California). Likewise, sometimes a resident or owner has engaged in misconduct that is actionable under the law.

Some incidents are one time "fouls". I tend to see this with elections issues. Watch for a blog on this subject in the near future. Elections issues can be brought to small claims court. There are things to know and understand about the processes and ultimate remedies are not yet established as the law has some more or less "open ended" language.

I have had many telephone consultations with individuals (homeowners and board members who find themselves unable to cope with what other board members are doing) and Boards as well, to help them get their arms around problems and have advised many to try their luck in small claims court. Some of the reasons I send people in that direction are: (1) that they cannot really afford to hire an attorney to pursue the issue (and I know of no legal aid society to help them, (2) that I do not know where else to send them; (3) that I feel that they may get help there, if they are willing to do the actual footwork to get there; (4) that their claims are resolvable in small claims court and the remedies are clearly available in the law, and/or (5) that I do not believe they have a good case or are willing to do the footwork necessary to seek out facts that support what they say, and they do not want to believe me, and so I think that "testing" their theories there (in small claims) is the cheapest and least painful way for them to get a reality check.

In California, an individual can ask for damages of up to $7500 in small claims court. An individual can ask for fines of up to $500 each for many violations in the HOA arena, if they can provide proof or adequate information to support their allegations, and an individual can ask for reimbursement of attorneys fees in getting help to prepare a case. A Board can ask for up to $5000 in damages ($2500 if more than 2 claims are filed in a year). An individual or individuals can ask for certain relief with regard to elections that they believe are mishandled.

I am not making any guarantees about success. Success depends on clearly being right, being organized, having believable evidence and/or testimony available, and, I believe, being courteous and respectful of the hearing officer and the other party (no matter how much you might despise them).

Each district small claims court has an advisor that a person can call for free assistance in getting the correct forms completed and preparing a case to take to small claims. The advisors are not advisors on the law itself. But they can help immensely in explaining the process and how to organize the information you want to present. You will need a lawyer to provide you legal opinions and feedback on the pros and cons of your case.

Many boards believe that small claims court judges and hearing officers are biased toward owners. I have seen some "miscarriages" of justice in small claims courts, but not often. Likewise, I have seen serious "miscarriages" of justice in arbitrations. In both procedures, the hearing officer/decisionmaker is not locked into the law. Small claims officers can give orders based on equity or law. Arbitrators can make mistakes that are irreversible. Mostly, I think the hearing officers and judges try to be fair and just need to be properly educated on the subject matter. Plaintiffs and defendants need to provide sufficient backup information and/or testimony to support a cause of action, not just disatisfaction. This rings true for both sides. Being right is not enough. A rambling party can easily lose the hearing officer's attention, or piss them off. Many claimants are simply dissatisfied with their associations or an owner's conduct.

Many owners complain about continuing dire financial straights or large special assessments to pay for shortfalls, underestimation of costs, or deferred maintenance. But that does not mean that they "have a case". Associations are run by volunteers. And mistakes are made, but whether they are "actionable" under the law depends on the extent of the evidence of misdoings, and "proving it up" in court.

I do believe owners are at a disadvantage in that there is no identifiable "plaintiffs' bar" (group of attorneys that exclusively represent owners). That I think is why the legislature in California keeps crafting small claims remedies.

But small claims court is not a place to go and "rag on the judge" about how much you hate the Board, or from the Board perspective, what a pesky troublemaking resident a person is. Its a "mini court" of sorts where decorum, truth, and respect should reside. It's not a legal aid society, and it's not a "split the baby" forum, at least most of the time it is not. I would guess that the party that is "in the right" and that is organized, prepared, on time, respectful, and ready to offer proof of their "cause" has a very good chance of succeeding.

Watch for more blogs on use of small claims for elections issues and collections issues.

Posted by Beth Grimm at 2:30 PM

November 16, 2007

Should You Get a Second Legal Opinion Before Suing?

When a doctor gives you very bad news, especially something that involves a lot of pain, anguish or terminal qualities, it would probably be a normal reaction to say "I want a second opinion." How often does that ring true for legal issues, such as a costly lawsuit?

Some associations in California have suffered some very big losses pursuing legal actions when there were holes in the cases that were either overlooked, or not disclosed to the Board. It happens. It might be because of an over-zealous attorney, an individual or firm that needed to boost fees to cover overhead, a young and not yet seasoned attorney who was not up on the supporting authority. It might be that one attorney simply failed to ask enough questions, or questions pertinent enough to elicit the information creating the "holes". Someone may have overlooked something in the records. It may have been an attempt to "save" a Board that created the problem - by covering up the issues. It may have been that the Board misinterpreted the "legal ease". Some attorneys' prose is better and more understandable than others.

It is the board, and often the owners, who suffer greatly at a "lost case" scenario. Of course, this runs true for individuals as well. Many are "sucked" or "suckered" into lawsuits, or inappropriately advised so as to be reckless in their endeavors. And since, in California, probably as in other states, either side can easily be hit with hundreds of thousands of dollars in legal costs, theirs .... and the other parties (since if they prevail - they may have to reimburse the other side's fees and costs), the risks of filing a legal action come with a high price tag. And you cannot expect to back out and dismiss when you are forced to recognize the weaknesses, without the exposure to a motion from the other side to collect their attorneys fees and costs expended to date to defend.

A simple inquiry to an attorney from whom you seek advice, and then another, for a second opinion, is:

"What are the worst and the best possible scenarios in going forward with this [lawsuit, action, etc.....]?" You will want the attorneys to acknowledge not only the best scenaro, but also the risks. You can ask for the attorney's opinion on the "chances", but truly, there is no such thing as a "slam dunk" (I will expand on this in an article to come soon), and so if your attorney says:

"You cannot lose" or "we don't need to discuss the downside, I expect you to win", I hope you have asked the above question, and I hope you realize that you probably can lose. Things can happen and facts or circumstances can arise after the case is filed that can have a seriously detrimental effect (remember these famous words: "if the glove does not fit, you must acquit"). Surprises and unknowns wreak havoc sometimes.

There might be an isolated or unusual situation where the only options available involve a lawsuit, and so you have to look at a lawsuit - but - ask the attorney for all of the options related to "causes of action" and find out whether including all in a "bucket" sort of mentality might jeopardize your ability to "prevail" and collect reimbursement of fees. If you win one count and lose one, its unlikely you will recover all fees, and may not recover any.

And get a second opinion asking the same questions: "What is the worst possible case scenario with this action?" and "What is the best case scenario with this option." And then you might also tag on "What are the other options - all of them." (In other words, "What are our options or what will happen if I/we do not sue?")

Some attorneys need to be more careful as well, in presenting too pretty a picture about a legal process that exposes a client to a multi-thousand dollar risk. Some have gotten sued for failure to properly advise clients of the upside and the downside of a proposed course of action.

Believe me when I say, if someone or some association loses a bundle of money, or is exposed to large losses, they will be advised by attorneys to look at all possible avenues of recovery. That "laundry list" includes the professionals advising the Associations and individual clients.

However, it is very important not to point the finger in the wrong direction without justification and evidentiary backup. That, too, can lead to a large and painful judgment.

Posted by Beth Grimm at 11:03 AM

October 23, 2007

What Happens If Boards Do Not Follow The Law?

Here is a question recently posed to me:

"Please advise me if there are any consequences for an HOA Board of Directors if the Davis Stirling laws and rules are not carried out. Who would impose any consequences? Who would know? Does being a volunteer board relieve of consequences? Thank you very much."

Answer: There are many consequences in the Davis Stirling Act and being a volunteer board member does not insulate a person from liability. There are protections for volunteer board members that provide insulation in lawsuits if the Association carries the certain amounts of insurance coverage (which by the way are understated compared to industry suggested amounts). The language for this is in Civil Code Section 1365.7.

There are penalties that the Association must pay to members in some cases, which might be attrirbuted to board members ... if the board members ignored the law, for failure to provide records that must be provided (Civil Code Section 1365.2); for failure to follow the election laws (Civil Code Section 1363.03, 1363.04 and 1363.09); for failure to honor the open meeting requirements (Civil Code Sections 1363.05 and 1363.09; and for failure to provide escrow information when requested by the selling owner (Civil Code Section 1368).

The best thing is to follow the law, of course. The next best thing is to have a justifiable excuse ready if you cannot. Impossibility and impracticability may get you somewhere in court if left to defend yourselves, but it is certainly no guarantee.

As for who might know, or bring charges? That would be up to members and the way members find out what is going on is to attend meetings and read association publications, financials, etc. A lot of information is supposed to be distributed each year to members.

Posted by Beth Grimm at 10:51 PM

September 28, 2007

NOISE ISSUES, WHERE WILL LIABILITY LIE?

Each time I write about noise issues, I get several emails. So I will write more on the subject.

This is quite a difficult one. A very recent question involves a 4 or 5 year old child that is autistic. The upstairs child is up all night, and so the parents are up all night. The downstairs owner finds the noise intolerable and wants to know what their rights are.

This is truly a difficult issue. I guess before assessing any potential liabilty I would ask some questions. What are the parties doing to minimize the noise? Have the upstairs neighbors been notified? They are not always aware of the problem. If so, have they done anything to minimize the nightime disturbances? I do not even know all the possibilities, whether there are changes in habits that might help, medications, change of bedrooms, carpetting or noise reduction methods that could be implemented. As for the complaining party, my question would be" "What have you done to protect yourself in this difficult situation?" Again, I do not know what the possibilities might be but I would explore white noise, earplugs, change of bedrooms, talking to the neighbors, trying to find out whether nightime noise can somehow be converted to daytime noise which, I assume, would not be as disturbing (disturbing, yes, but not as disturbing).

I know of a situation where a family with an autistic child was the brunt of neighbor complaints. This family dealt with complaints about daytime noise(nightime noise was not an issue in this situation). They encouraged their children (one who had autism and the other who did not) to play upstairs in their bedrooms instead of downstairs over the neighboring unit, purchased a small trampoline for the upstairs carpeted bedroom so their son could jump without disturbing the neighbors, attempted as much as possible to take the children out during the day and on weekends, purchased rugs and pads from the floors that were over another unit, and still, this family had to live with constant complaints by the downstairs neighbors to the HOA.

I have in past years dealt with exactly the sort of situation complained of in this blog. Strong-arming a family dealing with a noise issue involving a disability or medical condition that exacerbates noise is not the answer. Autism, ADHD, and tourets syndrome are just such conditions, and it would not surprise me if any family being pursued or disciplined for these issues would fight back with a discrimination claim.

Still, that does not leave the family with the child problem off the hook. Both parties have to try and mitigate the problems by making reasonable concessions. And, if that does not resolve the problem, the parties might try mediation, or looking at other options if a lawsuit is to be considered. I personally do not think a lawsuit is the right approach here, but if it were to happen, the concessions made by either or both parties would probably be considered. And as for the HOA, the developer, the flooring installer, or any other party that might be named as a defendant 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?
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?

Liability depends on facts and circumstances. Did any party have a duty to the other party? Yes, that of a reasonable, prudent person.

Did any party breach that duty to the other person? That is determined by the facts.

If so, did that breach cause the damages or pain and suffering, nuisance, etc.?

If any of the parties can prove the answer to be "yes" to these questions, they may have a case.

But again, way before getting there, think about your actions, starting from Day 1 of the development: the planning stages, configuration of buildings and units, the flooring choices that make sense and do not, and the fallout from exercising options.

And I will say just a few more things.

Conversions from apartments to condos are a very common source of noise issues.
Boards that try to opt out of these disputes or shift the responsibility for resolution of them by relinquishing control in flooring choices are not then immune from exposure to liability.
Allowing hard surface flooring in stacked units often leads to these to noise issues.

I am not by writing this inviting answers to a specific situation and potential legal dispute. I am offering this blog as food for thought. There are not a lot of cases on noise issues, and there are not clean answers to all of the problems that exist, but what there is - is the responsibility to act responsibly under the circumstances, and think before you sue. I do recall reading about a case in an Alameda superior court several years ago where a jury awarded about $700,000 in damages to an owner who found theselves in a very untenable situation. I believe it went something like this: the upstairs owner installed hardwood flooring. The association board or architectural committee either approved it, or the hard surface floors were not allowed per the documents and the board ignored them in spite of the owner's complaints (I think it was the latter). The upstairs owner exacerbated matters by purchasing a piano and playing at all hours of the day and night, and knew this bothered the downstairs neighbors.

As I recall, the upstairs owner was found responsible for about 2/3 of the damages and the association was held responsible for about 1/3 of the award.

I cannot find a case cite for this case. It was not a binding appellate decision that I can recall. But it makes sense. The parties that enabled the problem and exacerbated it were held liable for serious damages.

I believe it could happen to you, if you are more a part of the problem than the solution.

Posted by Beth Grimm at 11:03 PM

September 6, 2007

More On Contracts - I Promised This

What are some common mistakes that managers and boards in HOAs make in approving contracts?

Here is one of several mistakes that I pointed out in a recent E-Newsletter (which you can access ... and sign up for ... on my website at http://www.californiacondoguru.com):

No Way Out: Many contracts are very vague or noncommital about termination provisions. In other words, it’s easy to get in, but not easy to get out. And if the contract encompasses a lot of work or the term is for a long period of time, and the HOA finds it is very unhappy with the contractor’s work, conduct, reliability, etc.; finding a graceful way out can become very important. A bad working relationship is hard on all the parties. Specifics on incremental evaluation, assessment of work (such as a phased contract), and/or the ability to terminate the contract with or without cause on reasonable notice can become extremely important.

Look for the other common mistakes at the guru site ... simply "Enter" and scroll to the bottom of page two ... you don't know about the site yet?? Tell your friends, or maybe your enemies?? Anyone you think needs to know! That's the guru at http://www.californiacondoguru.com.

Posted by Beth Grimm at 7:24 PM

July 7, 2007

Managers Giving Advice On Amending Docs - Be Careful ...

I received a question from a reader about amending bylaws. This is it:

"We were told by our management company that changes in the byaws could no longer be decided by the majority of the board but needed the majority approval of the voting membership just like the CC&R's. Is this true?"

Here is the long answer to the short question. There are two things going on that I think are important to point out:

1. What is required for document amendments; and
2. Is the manager giving legal advice on a question that should have been posed to an attorney. (By the way, I see some variation of this just about every day, sometimes innocently - such as a manager responding to a question by spouting what he or she learned at a recent seminar or by reading an industry journal, and sometimes with the intent of avoiding legal fees. )

So on to the answer to these two items:

There are instances where non material Bylaw amendments can be made by a Board (very few). Tthe Corporations Code allows for this so it would only apply to incorporated HOAs. See the following:

7150. (a) Except as provided in subdivision (c) and Sections 7151, 7220, 7224, 7512, 7613, and 7615, bylaws may be adopted, amended or repealed by the board unless the action would:
(1) Materially and adversely affect the rights of members as to voting, dissolution, redemption, or transfer;
(2) Increase or decrease the number of members authorized in total or for any class;
(3) Effect an exchange, reclassification or cancellation of all or part of the memberships; or
(4) Authorize a new class of membership.

I am not going to recite all of the exception statutes - they cover just about everything. Suffice it to say that the board could not make any material changes at all, and certainly none related to membership, voting, elections and recall, the number of board members, terms, or anything meaninful to the members. The safest assumption always has been that amendment of the Bylaws in a homeowners association requires membership approval and the requirement for the percentage is normally stated in the Bylaws.

When a board is considering amending the bylaws, it is always best to get good legal advice from a practitioner experienced in the particular field of law. Managers do not generally know the Codes as well as an experienced HOA attorney, nor have they seen as many mistakes or misconceptions as an experienced and educated HOA attorney (although there may be many that know more than an inexperienced HOA or non HOA attorney). And this situation is a particularly good example of how the answer can get convoluted by complicated laws. As for recent changes in the law ...

The changes in the elections laws for homeowner association that took effect last year (2006) may be what the manager was referring to, but I am not sure without talking to the manager whether he or she fully understands the impact of the new election laws. The new law does "muddy up the waters" because the new elections requirements do relate to document amendments. The new laws (in a nutshell) provide that anytime the Board is conducting an election to amend the bylaws (or other governing documents) the election must be conducted per the new double envelope secret ballot system . Some might loosely interpret it to mean that all amendments require membership approval but I do not believe that to be the case exactly. See the language:

"Notwithstanding any other law or provision of the governing documents, an election within a CID regarding assessments, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section.

So while it is true that the law does pertain to elections for bylaws amendments when an election is required, it does not require that an election be held for amendments to the governing documents. Likewise, it does not require any election of members to approve amendments to the rules, which are also included within the definition of governing documents.

There is a difference, as you can see. Perhaps the manager, in referring to a recent change, was referring to the new elections laws; but if the manager's "opinion" was stated correctly to me, and the change being explained to the board is stated as it occurred, it reflects a misunderstanding of the impact of the changes in the new elections laws. They do not force or authorize elections on any topic - they simply apply to situations where an election is warranted.

Understanding seemingly minor technical differences can be quite important.

So, to get back to the bylaws amendment question, if the Bylaws are silent on a membership voting requirement, and the HOA is incorporated, the statute recited above would allow some amendments without membership approval (assuming the proposed amendments do not fall into any of the exceptions that are noted which collectively cover just about everything important). And if no election of members is required, that no vote would be required and thus, the new election requirements would have no bearing on the process.

And now, you are probably asking - if the Bylaws are silent on voting requirements to amend, and the subject matter of a proposed amendment is material, then what happens? The answer: any measures that fall into the many exceptions to Board approval would still have to be approved by the members, per the Corporations Code.

So, again, the safest and most conservative position to take on considering amendments to the bylaws is that membership approval is required.

Now, the next question... should managers write bylaws amendments and prepare the voting materials?

I think that is fine, but I also believe before presentation to the members, a board needs to have its election rules formulated and if possible, in place, and needs to have a knowledgeable attorney review the proposed amendment measure to assure it is properly stated so that it does not raise other issues of some kind. A very common mistake in proposing document amendments is to propose a change in language, without identifying that it replaces or supplements existing sections or without proposing a necessary corresponding elimination of lexisting anguage in the documents that needs to be modified or eliminated. Without this extra attention, the Association can be left with difficult conflicts in language and impact as between the original document and the amendments.

And I imagine now you are thinking ... attorneys just complicate things ...
I respond ... contradictory and hard to understand laws provide fuel for the fire!

Posted by Beth Grimm at 7:29 AM

June 11, 2007

Termites - Who Is Responsible?

Many people in HOAs have difficulty with responsibility for termites. The question often arises, who is responsible for treatment and eradication?

Question recently submitted: "In our documents, no reference is made to the term Planned Unit Development but that is what the board claims we are. We have lived here for more than 20 years and have had several instances of termites in one of the three exterior walls of our unit. The first two times, the HOA paid for eradication - the termites were in the experior wall. Then, the third time, the HOA refused.. but the work was still under warranty so further treatment was completed. The next time the Board refused to pay and there was no warranty. The HOA attorney says Civil Code ( Stirling Act) says that each unit owner is responsible for termites within their unit but we believe we are still dealing with an exterior wall. The termite company that I called said the same thing our "in-house" (association) termite company said - that the building can't be tented, we cannot tear open the exterior wall, the treatment will always be a "band-aid " approach by treating from within my unit to through the wall to exterior "dead space" before the stucco... and the cost is more than $500!!! The HOA has done nothing to treat these termites recently from the exterior, even though it is a known termite area...what can we do?"

Basically the answer is this: unless the CC&Rs (aka Declaration) say otherwise, in California the Davis Stirling Act - Civil Code Section 1364 essentially (paraphased) says that in a planned development, the owners are responsible for reasonable termite treatment and prevention with regard to their lots and in a condominium development, the association is responsible for reasonable termite prevention and treatment in the common area (which is usually the building except for the airspace that are the units). The scheme can be changed by a vote of the members to amend the documents.

There is a leading case in California that stands for the proposition that if the Board has a plan for dealing with termites, even though a spot treatment which may need to be repeated, it is not required to accept the demand of an owner for a different (and in the case more invasive) treatment such as tenting the units. The court applied the business judgment rule essentially saying that it would not second guess the Board on this subject.

The most common problem for owners in a planned development is how to contend with neighbors who take no measures to protect their units and will not willingly participate in a treatment for the entire building. Because of the law and documents that impose an obligation on the individual owners to take reasonable measures with regard to termites and pests, one owner who wanted to initiate treatment for his or her dwelling but needs to treat the neighbors as well to make the treatment effective would probably be able to get some relief in small claims court or superior court for the cost of any work done that was needed (the owner would have to prove this), which the neighbors refused to approve or contribute.

In any event, this is just general guidance/information. Legal counsel should be consulted if you need a legal opinion. There are factors that may enter into the final determination as to who is responsible.

Posted by Beth Grimm at 9:11 PM

May 10, 2007

DOGS - MUST HOAs ACCEPT THAT AN OWNER CAN HAVE ONE?

OKay, I am tired of dancing around the question, and several readers have asked - does an HOA board in California have to allow dogs?

And before answering, I will add the caveat - listen to your own legal counsel - there is debate on this very issue going on all over the State.

What does the law say?

1360.5. PETS WITHIN COMMON INTEREST DEVELOPMENTS.

(a) No governing documents shall prohibit the owner of a separate interest within a common interest development from keeping at least one pet within the common interest development, subject to reasonable rules and regulations of the association. This section may not be construed to affect any other rights provided by law to an owner of a separate interest to keep a pet within the development.

(b) For purposes of this section, “pet” means any domesticated bird, cat, dog, aquatic animal kept within an aquarium, or other animal as agreed to between the association and the homeowner.

(c) If the association implements a rule or regulation restricting the number of pets an owner may keep, the new rule or regulation shall not apply to prohibit an owner from continuing to keep any pet that the owner currently keeps in his or her separate interest if the pet otherwise conforms with the previous rules or regulations relating to pets.

(d) For the purposes of this section, “governing documents” shall include, but are not limited to, the conditions, covenants, and restrictions of the common interest development, and the bylaws, rules and regulations of the association.

(e) This section shall become operative on January 1, 2001, and shall only apply to governing documents entered into, amended, or otherwise modified on or after that date.

What on earth does that mean, with regard to the question of dogs?

I happen to believe the following words are key: ... "from keeping at least one pet within the common interest development ... [and] ... “pet” means any domesticated bird, cat, dog ... or other animal as agreed ....." and that they mean that an HOA Board (unless there is an exception based on the retroactivity clause) has to allow an owner have a dog, unless or until the dog has proven itself worthy of exile.

Some Boards have adopted "no dogs rules", but they allow other pets - risky in my view, but they are at least in some cases getting legal advice that it is okay to do so ... so be it - I am not here to criticize other attorneys. And it only takes two attorneys to disagree to be headed toward a lawsuit. And this is an issue that is ripe for litigation. However, the more conservative view, again, my opinion, and to avoid litigation over the meaning of the statute, is to allow the dog. That does not mean you cannot take action against an owner who allows a dog to be present that is a menace to society. Unreasonable barking and pooping without pickup are still generally actionable nuisances.

More commentary: This new statute raised eyebrows in 2001. For example, how difficult was it going to be to “expel” a problem pet? And if any rule on any subject was amended did the Association lose the right to prohibit pets if a prohibition existed before this statute took effect? Those questions still exist. And it is important to know about a California appellate case that was decided in 2004 that allows for a “companion pet”. The case is called Elebiari v. Auburn Woods I and it involved an association that attempted to enforce a “no dogs” rule (other pets were allowed) when the owner claimed the dog provided good company and improved her mood.

The truth is that it is getting harder and harder to prohibit any pets but to prevent the invasion of dangerous breeds of dogs, some associations are adopting CC&R amendments that ban certain types of dogs, specifically breeds that are uninsurable by some companies. The legality of that has yet (at least at the appellate level) to be clearly established; and as far as I know, there is no case law specifically forbidding such an amendment. If an amendment is approved by the owners, I believe, though, that it is necessarygrandfather existing pets at least until they die or are removed from the development, or become a nuisance subject to the governing document provisions (assuming they exist) on expelling the dog from the development. The proposal makes sense given the risk of substantial loss if there is an attack by any dog and since these dogs are identified to have the propensities.

Making sense is good. There are still those that would argue against such a proposal, and some that would flaunt their new-found power given by the statute by harboring a dangerous dog, but the world is not perfect now, is it? Whenever I hear that "my rottweiler" or my "pit bull" is the family baby and would not hurt a flea, my mind flashes to horrible stories reported of children being seriouisly injured and in some cases killed by the "family pet". In too many cases, it was a dog on the "list". Where do you think insurance actuaries who recommend these exclusions get their information from ... the news stories? or the facts?

Posted by Beth Grimm at 10:20 AM

April 25, 2007

Singling Out Children - What Can We Do?

The following is a somewhat common complaint ... especially common in a development that started out either being advertised as a community for seniors or mature people or a smaller community that attracted more "mature" (meaning older) residents. In 1988 the Federal Laws changed such that seniors communities have to have certain attributes to continue to prevent younger residents. Since many developments no longer qualified after the law changed, younger families began to move in to these developments and it created an uncomfortable situation for many. So here is a recent common complaint from the younger set:

"I feel as we are being targeted for having kids and the kids can't go outside with out being yelled or cursed at. There is no place to play but we live in a court so the kids want to use the street for basketball and frisbee, but the neighbors continually complain. What can we do? "

And here is a complaint from the older set:

"We have children in our neighborhood running wild. There is no place for them to play so they play in the parking lot. I pray every day that I do not run over a child - can't the Board stop this? Maybe if the rules were enforced, these families would move on - somewhere meant for kids. What can we do?

I could say "... Just learn to get along!" But it would not matter which of the above parties I said that to ... the differences do not go just fade away through logical thinking. Everyone wants to be comfortable in their living situation.

So, here are some suggestions I have made in this scenario:

If you have a clubhouse or meeting room, try to arrange some Saturday parties or activities to achieve interaction between the older and younger families, the children and adults. Put up a sign announcing the activities and make them inviting. There are many possibilities: ask for volunteers of older folks to share stories with the younger ones, have a reading hour with volunteers and children's books, set up a game afternoon for cards lor games like "Go Fish" or "Old Maid", puzzles or even charades.

If there is no place to play, but the street or parking lot, consider allowing some activities, possibly limited at times of the day when the areas are least busy, with volunteers to oversee or supervise the activities, warn of cars, blow a whistle, get everyone to the side of the street, in other words, the kinds of oversight that one might use at a pool to give everyone a break or address a situation where the pool needs to be emptied.

Look for a solution, an area in the development that might be developed into a small tot lot and explore that as a possibility - if the children of the younger variety.

Seek out and provide information about programs, parks, schools, churches or other places nearby where children can get involved in activities.

There is no easy answer - but someone needs to make an effort to find common ground between the "youngsters" and "oldsters". Otherwise, you may face "war", political stress and ongoing complaints at board meetings, demands and complaints back and forth between and among neighbors, and at the worst, a Fair Housing Complaint based on comments, actions, rules or something else going on that makes families with children feel like they are being mistreated. Real or perceived, this kind of ultimate result is painful for all involved.

Posted by Beth Grimm at 7:23 PM

March 15, 2007

"I don't want to follow the law." What Can Happen?

Many Boards in California of HOAs that do not have professional management (and some that do) are fed up, tired, hungry, and just want to go home. The laws are overwhelming. Need I say it again ..... seriously overwhelming. They picture the feds, the state, the other board members and the association members are all lying in wait for them to do something wrong. Well why not just take a stand - we are fed up. The costs are too high ... the members won't like it if we spend the money to (it could be anything but these are some examples I am hearing about) get a reserve study, get election rules, send out double envelope ballots, hire election inspectors, build up the reserves, purchase earthquake insurance (when the documents require purchasing it) , etc. etc. etc.

So what is the worst that can happen? .........................................................#$!*&%*#
(Before launching into this, please be advised that I hate to be the bearer of bad news, that I am doing everything within my power and time constraints, and that I have been hammering the state leaders, to provide more low cost education, simpler laws, and processes that do not require the services of a rocket scientist (or lawyer) to figure out.)

That said:

1. A board that does not follow the law subjects the entire Association to legal claims for damages of any kind (damages meaning monetary losses, loss in value of homes. personal injury, etc.) and fines (for records inspections rights violations, meetings violations, elections violations and that kind of thing).
2. A board that knowingly does not follow (=ignores) the law can lose the protections provided by insurance for acts of board members as one of the components of the coverage is negligence (accidental mistakes), and knowingly violating the law is not negligence. It is much worse.
3. A board that knowngly does not follow (=ignores) the law can lose the protections provided by statute (Civil Code Section 1365.7 and Corporations Code Section 7231 and 7231.5) for acts of board members as one of the components of the coverage is good faith (accidental mistakes), and knowingly violating the law is not negligence. It is much worse.
4. HOAs in California are mostly incorporated as Non Profit Mutual Benefit Corporations under the jurisdication of the Attorney General's Office, and so failure to follow the law can bring down the AG's hammer (maybe not as likely as an arrow coming from the membership because the AG's office often responds that they do not have the resources to pursue HOA owner complaints - but still, a possiblity that should not be ignored).

Often, the board member or manager will say something like: "Well, everyone else is doing it (meaning ignoring the law), so why can't we? I say, "If you choose to drive 95 down the freeway in a 65 mile zone, because everyone else is doing it, but you get caught, what do you think the police officer is going to say?" Here is the scenario most likely - "Well, I caught you and I am going to throw the book at you." What is unsaid is "I just heard you admit you knew you were going to fast." On the other hand, if you are going 45 mph in a 35 mph zone and no one is around, the police officer might just let you off with a warning, especially if you say: "Sorry officer, I did not know this was a 35 mph zone." In many cases, what the officer is trying to determine is whether you really did know, or made an innocent mistake. How do I know these things? My son is a police officer.

I think come "judgment day" for any Board that is not following the law might present a similar picture, but I would never tell a Board to "count on it."

Either can have serious ramifications for the Association and each board member that does it. It can have fallout that reaches other board members if the majority of the Board chooses to ignore the law. It can, in the worst cases, lead to individual liability on the part of the board members, extreme and unanticipated special assessments for the members, and maybe even punitive (that means "just for punishment") damages.

Make an effort to learn what to do, work to get on track, and although the laws are complicated, don't ignore the fact that they exist hoping you won't get caught. ............... And last but not least, as Collin Powell has said: "Get mad .... and then get over it!"

Or, if you cannot get over it and need a cause, gather up some of your cohorts and write to or visit your local legislator and plead your case as a board member (or board members) trying to do the right thing. Tell the legislators how complicated and difficult it is to try and figure out what is right. Let them know that placing the focus on punishment for those who are trying, instead of providing readily available education, is just not fair.

Posted by Beth Grimm at 10:42 AM

March 10, 2007

May an Association Ban Smoking in a Person's Home?

Smoking has been proven hazardous to the health of the smoker. Second hand smoke has been proven hazardous to the health of those forced to inhale it. Questions that often arise these days in homeowner associations are: (1) May we ban smoking in the common areas? and/or (2) May we ban smoking in the units?

The answer is yes, in some localities under some conditions. This is California. One would think the seminal cases might happen here. But they have not, at least not to the best of my knowledge. However, they have happened.

In Boston, a jury found that heavy smoking were grounds for eviction of the tenants. In 2005, when this judgment came down, the news story by Ralph Ranalli and Jonathan Saltzman, of the Boston Globe reported:

"In a case that tobacco law specialists say is one of the first of its kind in the nation, a Boston Housing Court jury ruled that a South Boston couple could be evicted from their rented water-view loft for heavy smoking, even though smoking was allowed in their lease. The landlord who rented the Sleeper Street unit to Erin Carey and Ted Baar ordered them out within a week last November, after neighbors complained of the smoke odors filtering into their apartments.
Carey and Baar, who each smoke about a pack a day and run an information technology sales business out of the one-bedroom unit, fought the eviction, arguing in court that the converted warehouse's shoddy construction and aging ventilation system were to blame for the wayward odors.

Last Friday, a jury ruled in favor of the landlord and the eviction. Even though the landlord could have written a nonsmoking clause into the lease and didn't, the jury found that the couple's heavy smoking violated a more general clause banning ''any nuisance; any offensive noise, odor or fumes; or any hazard to health.' Although the verdict is not binding on other courts, tobacco law specialists said the decision is one of the nation's first to declare smoking a nuisance serious enough to become grounds for eviction."

In November of 2006, in Golden, Colorado, "The Denver Channel.com" reported: "A judge has upheld a homeowners association's order barring a couple from smoking in the town house they own.

Colleen and Rodger Sauve, both smokers, filed a lawsuit in March after their condominium association amended its bylaws to prohibit smoking.

'We argued that the HOA was not being reasonable in restricting smoking in our own unit, nowhere on the premises, not in the parking lot or on our patio,' Colleen Sauve said.

The Heritage Hills #1 Condominium Owners Association was responding to complaints from the Sauves' neighbors who said cigarette smoke was seeping into their units, representing a nuisance to others in the building.

In a Nov. 7 ruling, Jefferson County District Judge Lily Oeffler ruled the association can keep the couple from smoking in their own home.

Oeffler stated "smoke and/or smoke smell" is not contained to one area and that smoke smell 'constitutes a nuisance.' She noted that under condo declarations, nuisances are not allowed.

The couple now has to light up on the street in front of their condominium building."

This activity across the country, although not binding in any court in California, indicates a possible trend. And many, many, many Californians are sensitive to smoke. It was not that long ago that a bill was introduced in Sacramento that would have provided that allowing smoke to waft through walls could be actionable in the courts. The bill did not survive. But the idea of preventing smokers from being allowed to cause a nuisance that adversely affects others has not.

Posted by Beth Grimm at 10:05 PM

March 6, 2007

May The Association Control The Size of Pets - Namely Dogs?

I get asked a lot of questions about pets. This is one of them. Associations generally should be able to control the size of pets, through the deed restrictions, CC&Rs (which require owner approval if amended) and/or rules (assuming the authority is in one of the recorded or regulatory base documents of the Association or in the law of the jurisdiction). In California, there is a law allowing owners to have a pet. There is an exception in the case of an association that had a pet restriction before the law took effect, and that has not amended any of the governing documents since that date. However, the law allows for reasonable rules.

The question of course, is "what is reasonable?" In California, the burden is on the owner to prove a rule is unreasonable and a pet size rule should be upheld if the association enforces it consistently (and not just against non-board members or their friends) and there is a monitoring method that is fair. Such a rule should not be imposed to target a specific pet because chances are, if the pet was already in the development by the time the size limitation which would otherwise exclude it, the HOA probably has to "grandfather" that pet (let it stay until it moves away or dies).

There is at least one "unreported case" in California upholding a pet weight limitation. "Unreported" means the case cannot be asserted as binding authority for the position the judges took, but it is an indication of how at least one appeallate court felt about weight limits.

Pet weight limits can be difficult to define. What if a pet that is under 25 lbs gets fat in its old age and the Board lets it stay? But the dog next door who weighs 26 lbs but is mean has to go? Why is a weight limit being imposed? Boards can address conduct, barking and aggressive behaviors with other rules. Is it because pets have to be carried by the owner (such as in a high rise trying to avoid problems with pet dander)? If barking is the issue, a loud yappy dog can be a lot more disturbing that a big woof ........ woof. Is it really a breed issue? Some associations prohibit dogs on the insurance "hit" lists (meaning those that cannot be insured against for bites or attacks).

I believe a board can impose a pet size limitation in the right circumstances. But that's always the question. What are they? For that, you will need good legal advice based on the need, facts, existing documents, and circumstances in your own development.

Posted by Beth Grimm at 1:56 PM

February 22, 2007

Failure to Apply for Architectural Approval - How Do You Get The Members Attention?

In many HOAs, the governing documents require that members apply to an Architectural Committee, or the Board (which in some cases acts as the Architectural Committee if volunteers cannot be recruited), and get written approval before beginning construction on any improvements or changes to the exterior of the homes, units or structures. In many HOAs, the owners ignore these requirements and it leads to serious problems. Owners start constructing things and making changes and at some point the Board understands that there is a big problem brewing. If owners continue on track, at some point, the governing document provisions providing control over architectural style, aesthetics, and the look and character of the development will fall. They will become unenforceable. Talk about individuality ... it could sprout and spread like a bad weed. The whole purpose of having architectural limitations is to preserve the original look, style, architecture, and consistency of the buildings and improvements. This vision began with the developer of the property and lives in the owners who are in favor of reasonable controls.

Once the Board is dealing with 2 or 3 or 4 or more works of "improvement" that were commenced without regard for the approval process, it knows real stress (as if that has not occurred already). A decision has to be made on many fronts:

What is it going to do about the changes that have already been made - ignore them? Ask the owners to apply for retroactive permission? Force the owners to remove or change the improvements?

What if the changes are something that would have been approved if asked? Is that something that is worth addressing? What if those owners decide to make more improvements, but the new ones are not something that would be approved?

What is the Board going to do about changes that would not have been approved? Demand that they be removed? Negotiate a settlement of some kind that would help to avoid precedent?

I cannot answer these questions or provide any kind of advice without knowing specifically what is happening, and this column is not for advice anyway, but I can suggest some ways to avoid this kind of scenario.

1. Give the owners the scoop, early and often, as to what the documents require, when they must apply, where to apply, how and to whom. I said often. I said often. I said often. Do you get it now? You can publish a box in your newsletter everytime one goes out. You must, under California law, circulate the architectural processes and procedures each year with the annual budget packet. You need to include these procedures and processes with all new owner packets.

2. Keep on top of the situations where owners have not applied prior to commencing construction of improvements that require approval. Get stop notices out immediately in any situation where you can, with a warning that proceeding with the construction, painting or whatever is occurring will be at owner's risk of having to remove or redo the job. If the Board is diligent with these, word will spread.

3. Consider disciplinary action. Develop a fine schedule that works as it should - as a deterrent more than a fund raising tool, but consider a hefty fine fine for failure to apply for architectural approval when the application is required. What do you think - is $1000 too steep? $500? $250? Be sure the fining policy allows for daily, weekly or monthly fines. Fines have to be sufficient to "deter". A $50 per month fee might not work as punishment for a room addition that sends the neighbors balistic, for example. But be sure that you are not adopting a fine schedule for which there is no authority in your documents or the law, or that conflicts with limitations in the association governing documents. And be sure to follow all requirements related to distribution of the fine schedule to members for comment before adoption (a California requirement.)

4. Check the documents to see if the Board has the right to charge back attorneys fees and costs to the owner of the unit or lot involved, as a reimbursement assessment, when the fees and costs are incurred in attempting to enforce the governing documents.

5. Negotiate agreements when necesary that help prevent precedent, that disclose to future purchasers any agreements made to remove improvements on sale, that "grandfather" existing situations that cannot be remedied because of facts, circumstances or cost concerns.

6. In addressing architectural violations, do not give advantages to "friends" or "favorites". In other words, if you are taking action on specific types of violations, make sure that all owners with the same violations are getting letters and being asked to do the same thing. If you are holding hearings and fining people, make sure these actions are consistent. However, I understand that you may end up in a position where the Board has to take one or more matters a step further, asking for court intervention, and in this case, it may not be fiscally prudent to move to this point with all current situations. Perhaps it is time to ask the court for a declaration of what is right, or an injunction mandating action, or damages. If you cannot afford to take the maximum action against any or all of the owners in the same boat, document the reasons as to why you are moving forward. If the Board has determined that legal intervention is needed to "stop the bleeding" or for some valid reason, it should be acceptable to choose one situation and not the others. And the reason as to why one existing problem is being "taken up higher" and not others needs to be palatable, for any potential hearing officer who has to respond to complaints of favoritism or inconsistent treatment to understand and accept them.

Why would I ever suggest a hefty fine for the "simple act" of failing to seek architectural approval? If you have ever had to get an attorney involved in a situation where residents have commenced various "projects" without regard to the required approval process and the documentary architectural controls, you know that it does not take much activity to incur costs and fees upwards of $1000. So ............... starting out with the threat of a fine of $1000 for failure to apply for architectural approval when application is required seems a reasonable place to start. Fines and fees may always be waived, suspended or deferred if the facts and circumstances warrant it; but the point here is getting the owners' attention about the application requirements prior to construction. That might do it.

A Board's "job" is not easy. What I am suggesting here is to just think about these things. Diligence and deterrence .. these principles are important and helpful in many areas, and this is one of them.

Posted by Beth Grimm at 6:30 PM

How To Get Document Amendments Approved When Owner Apathy Reigns

In California, there is a way to try and get updated documents (specifically the Declaration of Covenants, Conditions and Restrictions - i.e. - CC&Rs) approved if the members do not come through. If the CC&Rs require a percentage of approval that is higher than 51% (many of the older documents require 2/3 or 75% approval) but the board is not able to get that kind of return on the ballots, the Board may file a court petition asking for court approval of the docs. There must be at least 51% approval to ask the court to approve the amendments.

Once the petition is filed, the owners need to be notified and they can respond to the court proceedings and appear if they want to. It can be costly. Sometimes the form of notice required is costly. The court could require that all members be notified of the proceeding by personal service or certified mail instead of first class mail. Some judges are more lenient. As a matter of proof of a good faith attempt to get the members to vote, the Association would have to present to the judge all efforts to get members to vote and convince the judge that it made a good effort, and that apathy is the reason why the updated documents did not pass.

The costs could could reach or exceed $4000-$5000 (even if there is no material resistence) to $50,000 or more (if opposition is vehemently waged). While the Association often can ask for reimbursement of attorneys fees for actions related to the documents, in this case, at least in California, the Association cannot recover the attorney fees or costs from anyone since the petition is seen as a non-adversarial process.

Civil Code Section 1356.

It is nice to know that this process is available, but the better plan is to do the footwork needed to get owners to vote, even if that means block assignments, a major campaign, going door-to-door, or making phone calls to get owners to vote. Many Boards do not believe they can ever get enough members to vote to approve updated documents when a high percentage of approving votes is needed, but most will exceed all expectations, if they get enough people involved and just give it a serious effort.

Posted by Beth Grimm at 5:53 PM

February 21, 2007

Recall Elections Under the New Law - How Hard Can it Be?

I am receiving lots of calls about recall elections. Practitioners all over the state are faced with inquiries from groups of owners and board members who are looking for information as to how recall elections should be conducted under the new elections law. In some cases members have petitioned for it. In others, boards have received these petitions.

I have spoken with different attorneys about how these processes might be handled under the new law. I believe there are at least two viable approaches:

(1) Prepare two ballot packages to be mailed at the same time, one for the recall election itself and one for electing board members if the recall is successful (which would have "write in" capabilities because potential candidates will necessarily be identified ahead of the recall meeting), with complete instructions to owners as to how the processes at the meeting will be handled for both elections, in case both are needed.

OR

(2) Prepare a ballot package for the recall election, and appoint a person (choosing a professional in some capacity would be wise) to take charge of the second election process in case the Board is recalled. Consider a Resolution that would preclude the Board, if recalled, from taking action in the interim before the election for directors for any business other than proceeding with the election, except, of course, any business that MUST be conducted during that period. Make sure the person appointed has limited authority and knows how to conduct the election under the new laws.

The elections laws are too new to have worked out the kinks, but I think the key is to look for the most fair and above-board practices that attempt to comply with what is written in the law as closely as possible, with regard to all elections that are subject to the new law, board elections and recall elections being two of the types that are subject to it.

Posted by Beth Grimm at 8:56 PM

December 31, 2006

New Committee Requirements for HOAs

In California, beginning January 1 this year, the law changes and requires more of committees, some committees anyway. A reader sends this question:

"I read (somewhere) that starting January 1, 2007, committees will be required to take minutes at any meeting. Also, our Bylaws state that committee meetings and notice of such meetings shall conform to the same requirements contained in the Bylaws for meetings held by the Board of Directors. I interpreted this to mean that committee meetings are then open to homeowners to sit in and listen (to "attend", not to participate). The Board won't answer the questions about this, will you?"

I can answer the question as to the new law - after January 1, committees that "have decision-making power" are required to keep minuteds, and owners have a right to inspect those minutes. The law itself does not require that committee meetings be open to members or that notice be posted or sent out. However, if a set of bylaws has requirements about meetings, chances are they should be honored. I say "chances are" because I have not reviewed the documents in question but I do have experience with members adopting their own "interpretation" of language that does exist. Sometimes it is right and sometimes it is off the mark.

I can imagine situations where it would be a problem for committees to have to provide notice of their meetings and/or allow owners to attend. Say it is a 5000 unit association and there is a social committee to plan events, or an architectural commiittee to review plans, or a nominations committee whose job it is to find willing volunteers to serve. If notices had to be sent to owners or posted everytime there was a meeting by one of these committees, it could become quite cumbersome.

There is a situation where notice must be given of committee meetings. If a majority of the board serve on or attend the meetings and intend to discuss association business, then I believe that the meeting would qualify as a meeting that requires notice to owners, because it would actually satisfy the definition of a "meeting" under Civil Code Section 1363.05.

Posted by Beth Grimm at 6:12 AM

December 19, 2006

Can a Non-Member of an HOA be a Candidate or Serve on the Board?

A lot of Associations have run happily for years, never knowing or really paying attention to who is qualified to or is serving as a board member, some simply because it is so hard to find board members that no one questions the right to serve when volunteers step forward. And here is the kicker - if the other board members like the board member who turns out to not be qualified, and they find out about it, they tend to look the other way. But if they do not like the Board member, and he or she turns out not to be qualified, they demand the immediate resignation.

So what's the law say? The advent of Civil Code Section 1363.03 has brought this to a head in many associations. Why? Because an HOA in California has to adopt Election Rules, and those rules have to state qualifications for serving on the board. In an earlier blog I addressed the difference between qualifications to actually serve, and qualifications to actually be nominated, as I believe it is important to pay attention to detail if you are trying to help a board cope with new (or any for that matter) laws.

In this blog I am sticking to member vs. nonmember service. If the HOA bylaws say that a board member MUST be a member of the Association, then that provision is enforceable. However, the important attention to detail is "who then, is a member?" The reason I bring this up? Some argue that since they have a legal right to a share of the property by community property laws, that they are in effect an "owner" or a "member" (members are usual