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
June 22, 2008
Renters - How Do You Manage Them?
Here is a suggestion from a reader.
"We're a small 10-unit complex and 3 of them are rentals. The renters are often annoying, loud, and are smokers. While the owner occupied units are quite, mellow, non-smokers.
I lived in Germany and there HOAs can actually be on an approval-type board for all rentals. Meaning, if you rent your condo out, the HOA has a say in who you rent to. Usually this is by submitting the rental applications to the HOA board...and agreeing with the owner on who the best for for the condo-community would be. We actually have the additional problem that the owner's of the rental units never bother to show up to our HOA meetings....
I'm the president of our HOA, and I'd LOVE to enact something like this. But is is legal? Are there any precedents in CA of anything like this?
Would be great to read a blog post about this."
My answer is this. Obviously, the better renters are screened, the more likely one is to end up with a good tenant. But should the HOA assume responsibility for the screening? That is really the question here. I often am asked by an HOA Board, when updating the documents, "Can't we add a screening or eviction option to our governing documents?" My response is along these lines:
Yes, an HOA could set up some screening requirements and an eviction clause, but why would it want to do that .... other than hoping for better tenants of course? My concern is that the flip side of the HOA doing the screening or eviction is that it would most likely alleviate the owner of the unit from all responsibility, and possibly most if not all legal liability for tenant issues and problems. I can hear it now ... All the owner would have to say to the board is: "You have the option of screening and eviction, you can choose the tenant, and more power to you. If you screw up I can sue you, instead of you suing me. and, if you turn anyone away, and the place does not get rented because of it, I will seek the losses from you."
Have you noticed? California is the "Land of Entitlement"! (As opposed to the "Land of Enchantment" - which was the NM license plate ad for many, many years.) There are many people who shirk responsibility, pass it on, blame others, etc., and there are many people who can and will sue at the drop of a hat ... don't even ask me how many lawyers there are in this state hungry to take the cases. And Board members are volunteers. Aren't your jobs hard enough already?
So I ask you, what Board wants to step into the shoes of the landlord/ owner and do his or her job? What Board wants to assume the responsibility and liabity for choosing tenants? What volunteer Board knows all the ins and outs of renting property and what questions can and can't be asked, how to avoid discrimination claims? How many know that turning away potential tenants because of gender, sexual preferences (such as gay couples), children (meaning families with), and/or source of income (such as Section 8 tenants) can lead to expensive lawsuits? Who is the deeper pocket, the HOA or the individual owner?
Yikes, Boards .. once you know these things and think about them, I assume that you will get my gist. I never recommend that the HOA take over any owner/tenant situation in a manner that arguably lets the owner off the hook. I always recommend that the Board address the problems the tenants are causing, and at the same time keep pressure on the owners to do something about it too, through demands, fines, seeking reimbursement of costs, etc.
I also often suggest that the HOA could do some things that would help owners be better screeners, such as suggesting, by way of newsletter or otherwise, and some of the simple things:
1. Have the tenant complete an application with their personal credit and bank information. If they are unwilling to do so, they are not familiar with common leasing requirements of apartment complexes.
2. Get a property manager if you live out of the area that will check credit references, or do it yourself.
3. Encourage owners who rent their units to put clauses in their leases that say any violation of the association governing documents or rules is, at the option of owner, grounds to immediately terminate the lease.
4. Encourage owners who rent their units to put clauses in their leases that make the tenant responsible to owner for any fines or penalties or costs that are incurred by owner because of tenant's violation of the assocition governing documents or rules.
5. Let owners know that if they have a Section 8 tenant coming in, that the lease contract provided by the Fair Housing Department does not include the extra clauses mentioned above, so they should have a separate agreement on this with the tenant.
I have had rental property over the years and this is my tactic. I do not like to go to the trouble of checking credit, etc., and rely alot on instinct and how the tenant responds to my questions. So one thing I always say is I have an application I require that provides me with your bank and personal credit information, and references. I tell tenants I will be checking references and credit, and that I would prefer they tell me now if there is anything or any problem that might come to light through that process. I tell them that I would think of them more positively if they were honest with me up front instead of waiting to see if something shows up on the credit report or through checking with references. My experience with this is that the person either clams up (not a positive sign to me), says nothing will show up derogatory and they are sure of it, or they tell me everything that could show up and explain why.
Although I always require a credit app (for my own protection should the tenants trash a unit), I have never had to send any credit app in. I always got my tenants through sensing who was the most honest of the applicants by how they respond to that. I have never had a bad tenant.
Anyway, owners can do a good job of screening, ... if they want to, and even when a good effort goes south, owners can protect themselves with a good lease and "out" clause for any tenant that gets into trouble with the HOA rules. And in my book, the owner is getting the benefit of the rent (the HOA is not), and the pressure should be put on the owner to take care of any problems. The minute the HOA steps into the middle of that relationship (tenant/landlord), a new can of worms is opened.
Now I know someone is going to say ... what if the owner does not do anything ... or what if the owner cannot be located ... or lives a million miles away ... or is an abused elder relative .... or ... oh well, you get the picture. This is for a later blog!
Posted by Beth Grimm at 1:47 PM
June 18, 2008
Renters - Minutes - Do the Two Go Together?
Here is a question that has come up more than once:
"Should the Board distribute minutes to renters?"
One reader says: "Our current Board of Directors sees nothing wrong with sending out our minutes to renters. I objected so the current BOD position is that they will send "sanitized" minutes removing financial information to the renters. ... Our CCRs do not address the subject, but I think all owners should be concerned about inviting the involvement of non-owners into whatever actions or issues are addressed in our HOA minutes. I believe that the HOA should restrict its contact with renters, and that contact should first flow through their owners or property management companies. What is your opinion on this?"
Another reader says: "Our board does not send any communications, including minutes, which are distributed regularly to owners (we are a small association) to renters. My tenants are very interested in what is going on in the association and are planning on buying the place as soon as they can. Should I not be able to give the board my permission so that they can include my tenants in the list of communications about the association, including the minutes?"
So ... what are ya going to do? Two views. Two positions. This is what I think.
The minutes contain information private to the association, and care should be given to handing them out publicly. There is generally no legal requirement to provide the HOA minutes to anyone, but owners in California do have the right to ask and when they ask, can get copies, at cost.
That said, HOAs do want tenants to have copies of the rules and governing documents and so do want them to know something about what is allowed and what is not allowed. And buyers tend to ask for a year's worth of minutes among the documents related to purchase of a property in an HOA these days (if they are savvy). Condocerts.com which is a website that serves as a source of HOA information and documents for lenders, title companies and others who need to obtain documents related to sales of condos and townhouses asks HOAs that list with them to provide minutes for availability of these entities.
Still, I do not see a good reason to go to the extra expense to provide minutes to tenants. It requires the Board, if they send them out, to keep a separate list of recipients as generally, the owner and tenant lists would be kept separate. Associations that post the minutes in the common area (many do) are in essence providing this private information to all who pass by. Good or bad? I would like to say open communication and transparency is good, generally, but when minutes contain sensitive information about HOA financial issues and the need to consider a special assessment, or other matters such as discovery of an association-wide problem, the duty to the owners is to be prudent and prudence I think suggests not to disseminate the information further than the owners.
And I would not be in favor of having two sets of minutes, one sanitized and one not. That could be confusing.
However, renters tend to feel more involved if they get news of association matters and events. Distribution of the HOA newsletter to owners and tenants could be a good thing for the community and could help bring the tenants under the umbrella of good citizenship by understanding the rules or procedures of the association. My recommendation would be to include them in distribution of the newsletter, if it does not contain overly sensitive information, but not if it involves considerable expense as the owner can always provide what they want to their tenants.
My two cents. No cases or laws that I know of on the subject.
Posted by Beth Grimm at 10:24 PM
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
June 20, 2007
Renters At Meetings - Are they Allowed to Attend?
Here is a question on renters at meetings:
"I am a Board Member and at one time knew that ONLY members whose name is on the deed are allowed to attend meetings. Is that still correct. I am running for the BOD at our Condo (attached) unit and want to abide by rules and did not find it."
The answer is that the Board sets the requirements. Some boards allow tenants to attend. Some do not. If an owner gives a tenant a general or special power of attorney to exercise the rights of the owner, or even it could be so specific as to appoint the tenant as a person that can attend the association meetings on their behalf, the Board probably has to allow the tenant to attend, unless of course the tenant becomes a problem attendee, and then the Board would need to know what to do about that. (I will answer the question in another blog but search the blogs to find more on this.)
Documents do not always say specific rules about attending meetings but some do, so be sure to check the documents.
Posted by Beth Grimm at 7:49 PM