Monthly Archives: September 2013

And the Academy Award goes to…..your community association?

As a movie buff, I love nothing better than seeing my favorite flicks time and again. As a blogger on community association issues, I can't help but draw some analogies between some of my favorite movies and what I do in real life-helping community associations. 
I started thinking about some of the ways Hollywood has depicted community life over the years. Let's take a look.

The Crucible: this was originally a 1953 play by Arthur Miller based on the Salem Witch Trials. The 1996 movie with Daniel Day Lewis and Winona Ryder does a great job of depicting a community beset with hysteria where the court (aka Grievance Committee) is treated to some testimony that is less than credible but consistent in terms of its targets. Miller's play has been re-staged countless times since its creation and was also made into an opera so obviously the "witch hunt" theme hits many nerves including with some modern day association members.

Rosemary's Baby:  who can forget Roman Polanski's 1968 horror film?  Was there ever a creepier cooperative board? Ever?

The Neighbors:  While Dan Aykroyd and John Belushi are best known for their pairing in the Blues Brothers, this dark comedy based on the book by Thomas Berger (no relation) portrays suburban warfare in its most paranoid incarnation.

Over The Hedge:  this animated film by Dreamworks is one of my favorites. Even though most of us love cute little animals, Allison Janney plays the voice of Gladys Sharp, the president of the Camelot Homeowners Association who is disgusted by the furry intruders into her community. Spoiler alert if you haven't seen the movie already-at the end, Gladys is arrested for using an illegal animal trap known as the Depelter Turbo.

And on the small screen, a new TV show starring Jamie Gertz also bears the name of The Neighbors. In this show, Debbie and Marty Weaver cannot believe their luck in buying into a beautiful, gated townhouse community in New Jersey at a great price until they find out all of their neighbors are aliens. Community members all dress exactly alike and patrol the community in golf carts.

If you have never seen the foregoing movies or haven't seen them in a while, check them out with a community association perspective in mind when you do. Also, ask yourself if Hollywood was going to depict your community on the big screen, what would that movie look like?  



Problem Contractors

QUESTION: Is it permissible to blacklist a contractor in our newsletter or would we need to say something to the effect of “Contact a board member for a list of contractors who’ve done a good job and ones to avoid”?

ANSWER: This comes up from time-to-time in associations I represent. It happens more often in condominium developments because of common elements inside condo walls. Following are your options:

Good Contractors. Associations can keep a list of “recommended” vendors (such as electricians and plumbers) for owners to use. Doing so has two benefits: (i) it’s a great convenience to owners who have no idea who to hire and (ii) you get vendors who are familiar with the development, do good work, and are properly licensed and insured (assuming the association screened them).

Bad Contractors. When it comes to “bad” vendors, associations can do the following:

1. Owner Reviews. They can keep a list of homeowner “reviews” of various contractors, just as the Better Business Bureau, YELP and others do. The association does not make any recommendations, it simply compiles reviews–good, bad and ugly–and makes them available to homeowners.

2. Recommendations. Associations can take a more affirmative role by publishing a list of vendors they advise against using. They can make their recommendations based on complaints they receive as well as their own experience with contractors who violate the association’s rules.

3.  Blacklist. The final option is to ban bad vendors, i.e., they are not allowed in the development. This is especially relevant in condominium developments where contractors (such as electricians and plumbers) open common area walls to perform work. If their work is shoddy, it can result in significant damage to the common areas and other units. Since the association controls the common areas, boards have a right to protect the association from contractors who (i) damage the common areas, (ii) violate the association’s parking rules, hours of construction, etc., and (iii) perform shoddy work that could result in harm to common areas and surrounding units from water damage, mold, electrical fires and the like. Arguably, boards have a duty to ban such contractors.

Litigation Threats. One contractor I banned threatened to sue the association, me and anyone else connected to his “blacklisting.” When I responded to his lawyer with a list of violations, damage, and the association’s legal control of the common areas, the contractor went away. That does not mean a contractor won’t some day sue but the odds are against it. He would have to pay out of pocket for the litigation, defend his own bad acts, and convince a judge that he had a “right” to perform work on the association’s common areas. I don’t see that happening.

RECOMMENDATION: If boards create a list of recommended contractors and/or bans bad contractors, they need a paper trail justifying their decision in the event they need to defend it. The vendor list can be published in the newsletter or kept in the association’s office.

CONTRACTOR’S LICENSE
FOR MANAGERS


Earlier this year I raised concerns about a change in the law that put managers at risk of being unlicensed contractors if they solicited bids and oversaw common area maintenance projects for their associations. That problem has been addressed by the Legislature. It amended the Business and Professions Code to include the following:

The term “contractor” or “consultant” does not include a common interest development manager, as defined in Section 11501, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined in subdivision (d) of Section 11500. (B&P §7026.1(b).)

Governor Brown signed the change into law, which takes effect January 1, 2014.

RECOMMENDATION: The exemption does not mean that managers can now run construction projects without a license. Managers need to be prudent about the level of work they engage in and the size of the job. Associations should always use licensed and insured contractors. In addition, the larger the project the greater the need for a construction manager.

FEEDBACK


Unhappy #1. Really enjoyed your advice in latest newsletter re “Unhappy With Board Decision.” A few years ago, while on the board of an HOA, I also was unhappy with the leadership’s majority direction and, after assessing each of the alternatives you listed, chose #8. Now I’m very happy. -Wally H.

Unhappy #2. We have a board that has been in office for years. They do a good job but I’m afraid they are closed to new ideas. I don’t want to make waves and I don’t want to serve on the board. I’m opting for Option #1 and hoping for the best. -Rod G.

RESPONSE: Directors, especially old-timers, sometimes get set in their ways. When presented with a novel idea, they immediately list all the reasons why it will never work. If you’re persistent, you should be able to move them through J.B.S. Haldane’s four stages of acceptance:

1. This is worthless nonsense.
2. This is an interesting but perverse point of view.
3. This is true but quite unimportant.
4. I always said so.

Unhappy #3. Great article but I feel that you left out one of the most important steps–ADR. Mediation doesn’t always work but in my experience it works almost 100% of the time when both parties are willing to resolve the issue in an amicable manner. And, CAI offers a 3rd party mediation service for almost no cost compared to hiring an attorney to litigate the issue. Also, can we post your article on our website BLOG, assuming we give you credit? This is good information to put out there to owners, because we deal with this question at least once a week. -Mike L.

RESPONSE: Yes, you can use the article (with credit to the source). I didn’t include ADR because I view it as a pre-litigation requirement. But you’re right, I should have added it to the choices and will do so when I move the article to the website.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” We’re friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

Governor Signs SB 822: Community Association Managers Not “Contractors” or “Consultants” Under B&P Code Section 7026.1

In 2012, California enacted AB 2237, amending Section 7026.1 of the Business and Professions (B&P) Code relating to contractors (Section 7026.1), effective Jan. 1, 2013. AB 2237 required “consultants” overseeing home improvement construction projects to be licensed “contractors.” The result was much confusion and concern regarding whether community association managers were considered “consultants” and thus were now required to be licensed contractors when performing common management services such as bid solicitation or oversight of common area maintenance projects.

This year, CLAC sought to clarify what it believed to be an unintended consequence of AB 2237 (i.e., the possible casting of community association managers in the role of “consultants” under Section 7026.1). CLAC contacted the Contractors State License Board (CSLB) to alert them of the issue and to propose legislation to clarify that community association managers are not consultants or contractors for the purposes of AB 2237.

Fortunately, the CSLB agreed with CLAC that including community association managers in the definition of contractor or consultant was not the intent of AB 2237. The CSLB accepted CLAC’s proposed amendment to Section 7026.1, and helped CLAC facilitate its incorporation into this year’s SB 822, an omnibus bill introduced by the Committee on Business, Professions and Economic Development.

Governor Brown recently signed SB 822 into law, adding the following provision to Section 7026.01:
“The term “contractor” or “consultant” does not include a common interest development manager, as defined in Section 11501, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined in subdivision (d) of Section 11500.” (B&P Code section 7026.1(b))

Community associations and their managers should still be aware that licensed contractors must be engaged to perform certain jobs. B&P Code section 7048 requires use of a licensed contractor for projects having an aggregate contract price for labor, materials and all other items of $500 or more. Also be aware that, although the CLSB clarified on the legislative record its intent with respect to community association managers, SB 822 will not be effective until Jan. 1, 2014. Until that time, community association managers should remain cautious when undertaking construction project oversight which might be seen to constitute the work of a “contractor” or “consultant.”

Nancy I. Sidoruk is an Attorney with Epsten Grinnell & Howell, APC, and is also the firm’s Director of Practice Development. She is a CLAC delegate representing the Greater Inland Empire Chapter, chairs the CAI-GRIE legislative support committee and serves as co-chair of the CLAC Grassroots Key Contacts task force.

CLAC wishes to thank attorneys Kieran J. Purcell and Nancy I. Sidoruk of Epsten Grinnell & Howell, APC, for their efforts in preparing the clarifying language which, on January 1, 2014, will become B&P Code section 7026.1(b).  Nancy Sidoruk


Condominium Association Could Pay Price for Failing to Comply with Division’s Discovery Demands

The Division of Florida Condominiums, Timeshares and Mobile Homes began investigating the Heritage Circle Condominium Association, Inc. as a result of the association's failure to prepare annual financial statements and its failure to fund reserves. Unfortunately, the association continually failed to produce all of the documents requested by the Division throughout the course of its investigation which resulted in the Division filing a petition to compel compliance. 

The Division later amended its initial complaint to seek statutory penalties from the association. The Division's discovery requests were never fully met and finally, the trial court entered a default judgment, without a hearing, against the association. The Division requested and received liquidated damages in the amount of $25,000 and attorney's fees of $4,647.89.

The condominium association appealed and the Fourth District Court of Appeals reversed and remanded the case on September 18, 2013.  Whether or not the sanctions will stand remains to be seen. Still, this case clearly demonstrates how frustrated the trial court must have been with the condominium association as the striking of pleadings is a severe penalty which is used only in extreme circumstances. It is not an unfair question to ask why this association felt that failing to cooperate with the Division's discovery requests was the best strategic move. 

Sometimes the old advice to "stand up and face the music" are the words a wayward association needs to hear before making its errors even more complicated and more costly. There is simply no reason to believe that a regulatory agency is not serious about enforcing its requests and if a fellow board member, manager or lawyer tells you otherwise, get a second opinion!




Help!

QUESTION: I am unhappy with a recent board decision. What can I do? What are my rights?

ANSWER: Members who are unhappy with board decisions or indecision can do the following:

1.  Remain Silent. Be part of the silent majority… say nothing and do nothing and hope the problem resolves itself. Things run in cycles, so sometimes it works–you just have to be patient.

2.  Open Forum. Address the board in open forum. Be respectful and clear in describing your position. The board may not be aware of the problem and your bringing it to their attention should get results. If you are hostile, rambling and make unreasonable demands or threats, the board will label you as a “crazy” and reject your request. A letter from the association’s attorney might accompany the rejection.

3.  Write Letters. If the board does not respond to your open forum request, follow-up with a couple of letters. Do this for two reasons: (i) the squeaky wheel gets the grease and (ii) boards don’t like paper trails that create potential liability for the association. Keep your letters respectful and business-like. Do not engage in personal attacks or hyperbole. If your letter sounds like you have squirrels running laps in your head, imagine how a jury (and your neighbors) will view you when your letter is read in open court. Remember, you are trying to persuade board members not alienate them.

4.  IDR. If the open forum and follow-up letters don’t resolve the problem, try Internal Dispute Resolution. I’ve never seen IDR work but you never know. It keeps the issue in front of the board and it exhausts your friendly attempts to resolve the problem.

5.  Election. If the above actions don’t resolve the issue, run for the board or support responsible members willing to run. First, however, examine your motives. If the reason you want on the board is to get something for yourself at the expense of the community, that would be a breach of fiduciary duties. Make sure you and those you support want to serve the community, not your own agendas.

6.  Recall the Board. You can launch a recall of the board. This is a drastic measure and very disruptive to the community. It will permanently damage relationships between neighbors and create life-long enemies. Hence, the issue better be sufficiently serious that it can’t wait for the next annual election.

7.  Litigate. If none of the above works or you’re in a hurry to lose money and make enemies, you could always file a lawsuit. Rarely is a lawsuit justified–they are lengthy, expensive, emotionally draining and unpredictable. So carefully weigh the cost of litigation against the hoped-for benefit… and then weigh it again. If you’re suing to punish the board because of a perceived sleight or to prove a point, you’re one of the crazies.

8.  Move. If you live in a dysfunctional association, sell your property and get out before they cause you financial and emotional damage. Look for a single-family home not in an association or look for a good association. There are lots of them out there and one will be a good fit for you.

ZERO WASTE

Without getting into a debate on whether global warming is due to humans or to solar activity plus the earth’s natural weather cycles, both sides should agree that minimizing waste is a worthy goal.

Many community associations are limited in their ability to recycle. Even so, there may be other ways to reduce waste, whether it be water, electricity or refuse. Boards should consider setting up committees to study what can be done to minimize waste in their communities.

There are many internet resources that can be utilized. One of them is www.zerowaste.com. -Thank you to Larry Stirling for raising this issue.

RESERVE TRANSFER
TO PAY FOR LITIGATION

QUESTION: We spent money from reserves for litigation expenses, do we need to repay the reserve fund? Also, should we add a line item in our reserve study for monies we expect to spend on litigation next year?

ANSWER: Yes you need to repay the funds and no you should not create a litigation line item in your reserve account. The current Davis-Stirling Act is a little ambiguous but the language in the rewrite, effective January 1, is clearer.

Temporary Transfer. The use of reserve funds for litigation is deemed a “temporary transfer” (Civ. Code §5520). When temporary transfers are made, boards must explain to the membership the reasons for the transfer and when and how moneys will be repaid to the reserve fund. In addition, the funds must be restored within one year of the date of the initial transfer. (Civ. Code §1365.5(c)&(d); §5515.)

Reserve for Expenses. Even though you anticipate litigation expenses next year, they do not qualify as a reserve item. Reserve accounts are for monies “identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.” (Civ. Code §1365.5(f)(1); §5550.) Legal expenses do not meet the definition of a “component” nor do they meet National Reserve Study Standards.

Operating Expense. The appropriate place for anticipated legal expenses is the association’s operating budget. This will likely increase your budget which may require a dues increase or a special assessment for the next fiscal year. In addition, even though a temporary delay in restoring borrowed reserve funds is allowed, boards must exercise prudent fiscal management in maintaining the integrity of the reserve account “and shall, if necessary, levy a special assessment” to repay the funds within one year.(Civ. Code §1365.5(c)(2); §5515.)

CONCLUSION: The statute is a little confusing about the repayment timeline but it is clear that associations cannot leave holes in their reserve accounts by transferring funds for legal expenses and not repaying them.

Thank you to Robert Nordlund, PE, RS of Association Reserves for his  feedback on this issue.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” We’re friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

Hanging on: directors who fail to turn over association records and property

We've all heard of folks hanging on to items after a personal relationship ends which can create resentment and a host of other troublesome issues. Now imagine what can ensue when an outgoing community association director refuses to turn over association records and property?

Over the years, I have had new boards lament about the fact that a director who was not re-elected to the board refused to turn over vital association information which had been in his or her possession. These items can include the association checkbook, keys to the association office, original plans and specifications for the building and a plethora of other information which the new board needs to successfully transition the community's operations. Whether this refusal to turn over association property is borne out of spite, pettiness or neglect is not important; the outcome of paralyzing the association remains the same.

While there is language in the Florida Condominium Act which requires recalled directors to turn over any and all records and property of the association within five (5) full business days of the effective date of the recall, there is no similar language which would require an outgoing board member to do so. My group, the Community Advocacy Network or CAN, will be seeking to close this loophole in the 2014 Legislative Session by requiring any outgoing directors to similarly turn over all association records and property in their possession.

Has your community ever been impacted by a previous director's refusal to turn over books, records and other association property? What did you do about it? Some communities threaten and some even sue but in the interim, association operations are impacted and often critically. The fact that outgoing directors can play games with records that are not theirs falls under the category of "There oughta be a law" and CAN intends to ensure that there is one soon.


Failed Election

QUESTION: If the failure to hold an annual meeting is due to a lack of quorum, can the board just continue business as usual until the next election year?

ANSWER: If an association cannot reach quorum, the law allows an association to petition the court to lower its quorum requirement to the number of ballots cast. (Corp. Code §7515.)

Example. I represented a large association where the quorum requirement after the first attempt dropped to 15%. Even so, repeated attempts could not get voter participation above 12%. We took the matter into court and the judge reduced the quorum to the number of ballots cast, which allowed the association to open and count ballots. The petition process normally takes 30 to 60 days, depending on the court’s schedule, and applies only to the one election not all future elections.

Industry Practice. In my experience, most associations forgo the legal expense of a court petition and leave the board in place. To allow turnover, existing directors will sometimes resign their seats so new people can be appointed to the board. However the matter is handled, the board must publish its decision to the membership. If members are unhappy with the board’s decision, they have the right to file their own petition with the court. (Corp. Code §7515(a).)

RECOMMENDATION: I know I’ve made this recommendation many times before but associations should seriously consider amending their bylaws to eliminate quorum requirements for the election of directors. That would do away with the annual uncertainty, postponements, multiple mailings, and added expense just to make quorum.

COACHELLA VALLEY
EXPO

Rumor has it that difficult people sometimes live in community associations. On Tuesday, September 17, Sarita Maybin, communication expert, international speaker, and author, will be speaking on “Dealing with Difficult People.”The event will be held at the lovely Palm Valley Country Club in Palm Desert and is open to association board members–past, present and future. (That means homeowners, committee members, board members and anyone else involved in community associations.)

Register today at tsmith@cai-cv.org or at 760.341.0559.

NINE DIRECTORS
OR FIVE?

QUESTION: Our articles of incorporation require a 5-member board but our bylaws require nine members. The last paragraph of our bylaws state “in the case of any conflict between the articles and these bylaws, the articles shall control.” Does this mean we can reduce the board to five directors?

ANSWER: Not only can you reduce the number, you must reduce your board to five directors. Since your bylaws defer to your articles of incorporation, your articles control. Even if your bylaws had been silent, starting January 1, 2014, the Davis-Stirling Act establishes a mechanism for resolving conflicts between documents. (Civ. Code §4205.) To the extent any inconsistencies exist, the following hierarchy controls in descending order of importance:

  • law
  • declaration (CC&Rs)
  • articles of incorporation
  • bylaws
  • operating rules

RECOMMENDATION: If you want to keep your 9-member board, you need to amend your articles to increase the number of directors to nine. Otherwise, you need to reduce your existing board to five by allowing existing directors to serve out their terms but in your next election reduce the number of open seats so that only five would be eligible for election. If their terms are staggered, stagger the reduction.

INVITATION TO
ABCs OF HOAs

I will be speaking at the ABCs of HOAs, a free seminar for board members hosted by HOA Organizers.

This half-day event will cover important issues for association boards, including (i) changes to the Davis-Stirling Act that take effect January 1, 2014, (ii) insurance by Demetrios Xanthos with SAX Insurance Agency, (iii) collections by attorney Richard Witkin of Witkin & Neal, (iv) reserves by Les Weinberg with RSI and (v) management responsibilities and procedures by Neda Nehouray with HOA Organizers.

The seminar will be held on Saturday, October 26, 2013 from 11:00 a.m. to 3:00 p.m. at 7100 Hayvenhurst Ave. in Lake Balboa, CA 91406. Space is limited so make sure you RSVP by email to info@hoaorganizers.com or call 818-778-3331.

FEEDBACK

Age Verification. The idea of a copy of my driver’s license in the hands of a homeowners association or management company gives me nightmares. What about protecting the info from identity theft? -Bob S.

RESPONSE: Because the association is only interested in your birth date (so it can comply with HUD requirements for 55+ communities), you could send a photocopy of your license with the license number redacted. That protects you against identity theft and satisfies the association’s need to comply with HUD rules.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” We’re friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

55+ Age Verification

QUESTION: Our senior community was asked to fill out an age verification form along with a copy of our driver’s license. In the past we were asked to fill out a simple “Affidavit of Compliance,” which asked for our signature under penalty of law. I thought this fulfilled our requirements to maintain our senior status.

ANSWER: An affidavit satisfies the requirement but so does a driver’s license. By their nature, senior communities engage in permissible discrimination. Such discrimination is allowed by the federal government under the “Housing for Older Persons Act of 1995″ (HOPA), which is overseen by the Department of Housing and Urban Development (HUD).

Demonstrate Intent. To maintain the right to exclude people on the basis of their age, HUD requires that senior communities meet the following criteria:

  1. At least 80% of the occupied units must be occupied by at least one person 55 years of age or older;
  2. The association must publish and follow policies that demonstrate an intent by the association to provide housing for persons 55 years of age or older; and
  3. The association must comply with age verification procedures designed to ensure compliance with 55+ requirements.

Age Verification. To meet age verification requirements, the following documents are deemed “reliable” by HUD:

  • birth certificate,
  • driver’s license,
  • passport,
  • immigration card,
  • military ID, and
  • any other local, state, federal or international documentation so long as the document contains information regarding the age of the person.

Self-Verification. HUD also considers self-certification through an affidavit as a reliable form of verification. An affidavit is a sworn statement under penalty of perjury by an adult member of the household that at least one occupant is 55 years of age or older.


Jasmine Fisher, Esq.
Adams Kessler PLC   

Uncooperative Occupants. If some occupants fail or refuse to cooperate with age verification surveys, the association can have a knowledgeable third party (a board member, manager, neighbor, etc.) sign a verification that at least one of the occupants is 55 years or older. You can also use statements indicating age in prior applications or government documents such as census data, i.e., household censuses conducted by cities or towns, to satisfy the requirement.

ADULT
SWIM TIMES
 

QUESTION: I know associations cannot restrict children from using the pool but is there any way you can have an adults-only swim time? We are unable to do laps in our pool because many parents don’t supervise their kids and I have had children actually jump in the pool and almost land on top of the swimmer.

ANSWER: Unless yours is a senior community, you cannot restrict children as it would violate various anti-discrimination laws. Instead, you can set a reasonable time period for “laps only” but open it to everyone. Children who want to swim laps can participate (and some may want to). This makes it nondiscriminatory by placing a reasonable restriction on how the pool is used, not who uses it. You may also want to put lane dividers in the pool to help make it clear the pool is for laps only during those hours.

Shameless Plug: Associations that want to implement an inexpensive, cloud-based, paperless management system should take a look at Smart HOA–a product I developed. You can take it for a spin at no cost. Contact me at info@SmartHOA.com for a free trial.


Adrian Adams, Esq.
Adams Kessler PLC


“Legal solutions through knowledge, insight and experience.” We’re friendly lawyers; you can contact us at (800) 464-2817 or info@adamskessler.com.

Governor Brown Signs “Clean Up” Legislation for Revised Davis-Stirling Act

California Governor Jerry Brown recently signed SB 745 into law. The bill is a multi-issue omnibus bill, and as to community associations primarily acts to “clean up” some issues related to the reorganizing of the Davis-Stirling Common Interest Development Act, which becomes effective on Jan. 1, 2014. As enacted in 2012, AB 805 reorganized and rewrote the Davis-Stirling Act in a new part of the California Civil Code. As often happens with such a significant undertaking, items are inadvertently omitted, or changes in the law are not incorporated in time to be included in the bill. SB 745 serves to rectify those types of issues.

One of the inadvertent omissions in AB 805 dealt with how a document could be delivered to an association. As enacted by AB 805, new Civil Code section 4035 allowed for documents to be delivered to an association in a wide variety of ways, including email, fax or other electronic means, or personal delivery if the association had agreed to such methods of delivery. However, mail was omitted as an acceptable way to deliver documents to an association. SB 745 amends section 4035 to also allow for delivery of documents to an association via “first-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service center.”

In addition, two bills were enacted in 2012 which amended three provisions of the former Davis-Stirling Act (which is still current until the end of 2013).  As both bills were enacted after AB 805, the provisions of those bills were not included in the new Davis-Stirling Act. SB 745 corrects this problem.

One of the issues addressed by this correction is the requirement to have a person present at a physical location where members of an association can listen to the board transact business if a board meeting is held telephonically. As enacted, AB 805 required that at least one director be present at such a location. SB 745 amends Civil Code section 4090 to restore the option of allowing the person required to be present to be a director “or a person designated by the board.” This gives boards some flexibility with respect to telephonic meetings, and allows for the board to designate someone, such as the association’s manager, to be present at a physical location for members to listen to the board meeting rather than requiring that at least one director be present at the location.

SB 745 also clarifies several of the new provisions in the “new” Davis Stirling Act. New Civil Code section 4205 provides guidance as to which of an association’s governing documents controls if there is a conflict among the documents. As enacted in AB 805, there is some ambiguity as to whether section 4205 also defines when a conflict exists. As that was not the intention of the legislature when it enacted AB 805, SB 745 amends the language of section 4205 to avoid any misunderstanding regarding the purpose and intention of the statute.

New Civil Code section 4070 is also amended by SB 745 to authorize an action that is required to be approved by a majority of a quorum of the members at a duly held meeting at which a quorum is present to, instead, be approved by a majority in a duly held election in which a quorum is represented, thereby also applying the statute to elections conducted by written ballot.

Lastly, SB 745 amends the form for billing disclosures, and prohibits cancellation fees for requests for documents, as specified.

This is a guest post by Robert M. DeNichilo of DeNichilo & Lindsley, LLP.  Mr. DeNichilo is a member of the CAI-CLAC PR Committee.RMD Headshots Sept 2013-9388-web resized