Hearings and Enforcement: The Other Dispute Resolution Procedure

The California Legislature turned its attention to Internal Dispute Resolution, or “IDR,” in 2014. As a result, Associations must now allow homeowners to bring an attorney, or a third party, to IDR meetings. (The changes are in Civil Code Sections 5910(f) and 5915(b)(4).)

IDR is a great tool; an enforcement hearing before the Association’s Board can be useful in resolving a dispute between an owner and an Association. Hearings resolve most disputes, usually with a bit of compromise on each side.

The Davis-Stirling Common Interest Development Act sets out the basics. (Civil Code Section 5855.) Associations must give owners ten (10) days’ written notice of a hearing. The notice must state the nature of the alleged violation; it should provide enough information to allow the owner to prepare a response. (It is best that Board members and managers not take time during a hearing to explain the facts of an alleged violation to homeowners. This can take time, and can lead to arguments.) The Board must provide written notification to owners of its decision, within fifteen (15) days of the hearing. The law requires notice of disciplinary action, but it is also wise to notify the owner if the Board decides to impose no discipline.

The Davis-Stirling Act says that a hearing should be held in executive session at the request of the owner subject to the discipline. Most Boards hold hearings in executive session routinely, and this is a good idea. Sometimes an owner asks that the hearing be held in general session, and the Association must agree to this. Most owners, however, regard violations as a private matter.

Usually, the Board will rely on violation reports from the manager or other owners. Some owners prefer to remain anonymous. Boards should establish policies as to whether they will allow this; the law provides no guidance. At the hearing stage, it may be reasonable to allow witnesses to remain anonymous. But if the matter goes further, witnesses must understand that they may be subject to
subpoena, and will need to testify.

At the hearing the Board may rely on information provided by other owners and management. These reports are not under oath, and to a lawyer, they may be hearsay. But it is still evidence that the Board can consider. Some Bylaws allow owners to cross-examine witnesses at hearings. This seems a bad idea. Association Boards are not equipped to preside over the taking of testimony, with direct and cross examination. Absent such a Bylaw provision, owners do not have the right to cross examine, or “confront” their accuser in a Board hearing.

Homeowners do have the right to state their case succinctly. When they digress, it is appropriate that the president or another Board member gently guide them back to the issues at hand. The Board should ask relevant questions, but should not argue. The Board may politely decline to answer owners’ questions. This is the time for owners to state their case, not to quiz the Board.

Homeowners may ask to bring an attorney. The law does not prohibit this, and Bylaws may allow it. There is little basis for barring homeowners’ attorneys from attending hearings, but the Association should involve its attorney also. The homeowner’s attorney must understand that a hearing before an Association Board is not the place to cross-examine witnesses or employ courtroom theatrics.

The Board must take its role seriously. Board members owe a duty to consider all sides. They also can, and sometimes must, evaluate the credibility of contradictory statements. They should use their common sense, just as judges and juries should.

There are always two sides to a story. Often, a responsible Board recognizes that a violation may not have occurred or that there are circumstances which would make imposing a fine unfair. By acting fairly and giving full credence to the homeowner’s version of events, a careful Board may resolve a dispute by reaching a fair result and communicating it to the homeowner.

John R. MacDowell is managing shareholder of Fiore, Racobs & Powers’ Orange County office and is a delegate to CLAC from the Orange County Regional Chapter of CAI. He serves as CLAC’s Chair-Elect.

John R. MacDowell Fiore Racobs & Powers

John R. MacDowell
Fiore Racobs & Powers

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Davis-Stirling Celebration

As most of you know, in addition to my weekly Sunday newsletters, I’ve taken on temporary duty assisting with a large state-wide event celebrating the 30th Anniversary of the Davis-Stirling Act.I encourage everyone to register for the historic February 27 Celebration which will feature keynote speaker Willie Brown, Senator Larry Stirling, Prof. Rosenberry and others (see side-panel for list of honorees). Tickets and sponsorships are still available but going fast. If you’re a manager, board member or homeowner in an HOA, you DON’T want to miss this event.

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Community Association Education

KATHARINE ROSENBERRY Law Professor Katharine Rosenberry’s signature contribution to community associations occurred in 1985 when she worked with Assembly members Gray Davis and Larry Stirling and a Task Force of industry leaders to craft legislation stabilizing California’s rapidly growing housing industry.Prof. Rosenberry identified 43 issues that needed to be addressed by the legislation. Overcoming great opposition, they drafted language, held hearings and then shepherded the bill through the Legislature. When it was signed into law by Governor Deukmejian, it became known as the Davis-Stirling Common Interest Development Act.

The Act established consumer protections with clear requirements for rules enforcement, maintenance, finances, reserve studies, dispute resolution and assessment collection.When the communist bloc fell, Professor Rosenberry was asked to lecture in the Czech Republic, Hungary and Poland on converting state owned apartments to private common interest developments. This was followed by a two-year project writing community association laws for England. And then, teaching positions at two law schools in China on cross-cultural approaches in common interest communities.

Join us in honoring Professor Rosenberry and others who made invaluable contributions to our industry at the 30th Anniversary Celebration and Awards Gala at the Fairmont Newport Beach HotelClick here to RSVP for the event.

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