Monthly Archives: June 2015

Grilling Etiquette In A Rental Property

Summer has arrived, and for many, this also signals the start of grilling season. When you are in a rental property, there are a few points of etiquette and caution that you should follow if you want to keep both your landlord and your neighbors happy without sacrificing your prize-winning burgers. 1. Keep the grill away from […]

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Building Permits

QUESTION: Our CC&Rs state the Architectural Control Committee may require a person submitting plans to obtain approval of governmental agencies. Is there a legal obligation for our association to do this and what are the dangers and legal ramifications to the association if it does not?

ANSWER: There is no obligation that your architectural committee demand proof that owners obtain building permits since the language in your CC&Rs is permissive rather than mandatory. Despite the language, homeowners have an independent obligation to obtain permits. Policing that obligation falls to the city or county in which the association is located.

Good Practice. Even so, many condominium associations require proof of a building permit before an owner’s remodel/construction can proceed. The reason is that construction in a condominium impacts common areas. Requiring a permit as part of the architectural approval process means the association can have a reasonable expectation that any alterations to the common areas will comply with building codes.

RECOMMENDATION: Every association should have written architectural standards with approval procedures. In addition, boards should seriously consider using a remodeling agreement (drafted by HOA legal counsel). Approval of architectural applications can be conditioned on the owner signing the agreement which obligates him to: (i) obtain a building permit, (ii) use licensed and insured contractors, (iii) not deviate from plans without approval, (iv) follow the rules, and (v) other requirements as may be appropriate. In addition, any significant alterations to the common areas should require a recorded covenant obligating the owner to maintain those alterations.

SWIMMING POOL
“GUESTS”

QUESTION: A renter today allowed his cleaning crew of three woman to bring 11 children, teens and adults to our community pool. Yes, they had a key. They were in the pool for three hours including feeding everyone lunch. The renter was not there since he goes to work at 7 a.m. and comes home after 8 p.m. What liabilities go along with this activity? Can we do anything?

ANSWER: Yes, there is plenty you can do. Neither the owner nor his tenant has the right to allow vendors, contractors, or domestic help (plus families and friends) to use the association’s facilities.

Liability. The potential liability is the same as if members used the pool, i.e., injuries and/or drownings that result in lawsuits. However, the chance for injuries increases with the number of children–especially if they are unsupervised. Another negative is the unhappiness of your members over strangers using the pool.

Rules & Regs. If you don’t already have pool rules, your board needs to adopt rules that: (i) the pool is for residents and guests only, (ii) guests must be accompanied by the resident, and (iii) guests are limited to three. The number of guests can vary from association to association so long as the limitation is reasonable. With rules in place, interlopers can be asked, politely, to vacate the pool area (or any other common area facility).

Rekey the Pool. In addition, the unauthorized “guests” can be required to surrender their key to the association. If they refuse, you should not get into a wrestling match with the person. Instead, you can rekey the facilities and charge the thoughtless owner for the expense (following a reimbursement hearing).

Hearing & Fines. You can also hold a disciplinary hearing with the owner and his tenant. If the board finds the tenant violated the rules, fines can be levied and pool privileges suspended for up to thirty days.

Discrimination. The real danger for associations is the drafting of the rules. Too many get themselves in trouble for discrimination against families with children. There are plenty of rights advocacy groups out there that will happily sue associations for discrimination. You want to make sure you’re not one of the suees.

RECOMMENDATION: Have legal counsel review your rules.

FEEDBACK

Newsletter #1. Adrian, you make my day with your humor. It is difficult being a board president and I appreciate all the smiles I can get! -Vickie B.

Newsletter #2. I am inspired, informed and stimulated every Sunday by your newsletter. Thank you so much for providing us with your knowledge and wisdom! -Denyse B.

Newsletter #3. I just want you to know I appreciate your weekly newsletter. The questions posed are interesting and make me aware of issues facing other groups. Keep up the good work! -Sammie B.

Newsletter #4. Loved, LOVED your joke about growing freeways via watering them! -Gary F.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

Send Tenants a Firework Notice One Week Before a Holiday

With Independence Day arriving soon, many people look forward to express their patriotism through fireworks. The noise and lights appeal to both young and old, but the dangers that fireworks pose to people and property should make landlords take a stand against them at their rental properties and fully communicate their desires to their tenants […]

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Pest Infestations – Association Board Member Responsibilities

When you get a call or email from a resident who is frustrated, concerned or freaked out about pests, what are you and your fellow board members obligated to do? Whether it?s snakes, roaches, rabbits, coyotes, wasps, rats, mice, bats or any other common household or garden pest, where does the responsibility for pest control end for the resident and when does it become a communal problem for the homeowner or community association to solve?

How association board members can deal with rat infestationsIn theory, the unit owners are responsible for pest control within their own dwellings and exclusive use areas, and the HOA is responsible for infestations affecting anything in the common areas.

Of course, the legal theory sometimes doesn’t match up well with reality, and no attorney in the business of drafting association covenant documents can possibly foresee every possible eventuality and describe the solution and exact division of responsibility in detail.

When it comes to responsibility for pest control and eradication, it will take goodwill and common sense on the part of both residents and the board. This is especially the case because when there is an infestation affecting both private and common areas, the eradication effort needs to be coordinated and simultaneous.

Pests Can Be Surprisingly Hard to Eradicate

An association’s attempts to eradicate pests can be complicated by a number of unforeseen factors. For example, your pests may be impossibly cute, causing their eradication to traumatize the children who live in or visit your development. But even humane methods of removing cute pests can bring about problems.

That’s what happened to a Broomfield, Colo. HOA. They were faced with a rabbit problem and initially planned to kill the precious little rodents – until they heard an outcry from their residents.

“What do I tell my granddaughter when the bunnies are gone or she sees them in a trap? What are we going to say? We killed the rabbits because they ate our flowers,” said one grandmother.

In the end, the HOA in question pardoned the pesky rabbits and sought for a way to trap and relocate them elsewhere. It was at this point that the HOA ran into a complex series of local laws that regulated how far away from the capture location animals can be relocated. For example, cottontail rabbits had to be relocated within 10 miles, while other species of rabbits had different regulations. Some species required them to get a special permit from the Colorado Division of Parks and Wildlife.

You shouldn’t have much trouble with your common roaches, rats and wasp infestations. But for more unusual animals you’d better check with local wildlife officials before trying a relocation process.

How State Laws Treat Pest Infestations

Your state law may shed some general light on who’s responsible for what. For example, California Civil Code Section 1364 (The Davis-Sterling Act) spells out:

(a) Unless the Declaration provide otherwise, the association is responsible for repairs, necessary replacements and maintenance of the common areas in a CID, other than “exclusive use common areas,” and the owner is responsible for maintaining his or her separate interest and “exclusive use common area.”

But note that the law defers to the Declaration, which, in most cases, is your association’s CC&R document. This state law, and likely the law in your state, only kicks in only if your documents don’t adequately delineate responsibility.

California law also has special provisions for termites and other wood-destroying pests that allows the association to take control of the situation and prevent the infestation from spreading to other units.

Pest infestations are bad. Handling them on your own is worse. Get help from a professional association manager >>

Pest Infestations Caused by Humans

Sometimes there’s no direct cause for pest infestations. Mouse and snake infestations just happen, regardless of how much communities do to dissuade them.

But sometimes residents do cause pest-related problems (e.g., an old widower who enjoys feeding stray cats). In this case, documentation is key. If a problem resident can be identified (preferably via multiple witnesses), your eradication efforts need to be combined with one or more registered letters or other formal notices. If the problem behavior does not stop, the association may have cause of action to sue the problem resident (or, if it’s a renter, the owner) to cover the association’s eradication costs.

Paying for Pest Extermination-Related Relocation

State law varies on what party should pay for relocation. In California, for example, the Davis-Sterling Act says that if you have to relocate a family for fumigation or other measures, the association must pay for the relocation.

Check with your state’s laws. If they aren’t clear, it’s a good idea to address this squarely in your association’s CC&Rs and vote on how you want to handle this in your community. However, as a practical matter, if the association wants to retain the authority to force a family to relocate temporarily while their home is tented (to prevent further damage and infestation, for example), it makes sense to have the association pick up the costs, too.

What Maintenance Responsibilities Do Landlords Have?

Most states and many localities require landlords to meet certain maintenance and “habitability” standards for their rental properties.  These may include responsibilities for things like sufficient weatherproofing for the area, hookups for heat, water, and electricity, and a building that is reasonably clean, sanitary, and structurally sound.  Installing smoke detectors, working locks, lights in common […]

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After Your Inaugural Ball: No Gridlock or Filibusters Allowed in the HOA Boardroom

Just imagine how attentive politicians would be to “the people’s business” if they faced personal liability to the voters for financial losses resulting from “doing nothing” or “going too far”?

In America, once someone wins an election to public office, the only thing they really have to worry about is getting re-elected. For those selected to serve in Washington DC or state capitals, accountability and political reckoning come only through the result of the next plebiscite. Presidents can pursue their own initiatives and legislatures can opt to do nothing.

Winning the election to your HOA’s Board of Directors is no such animal. Under California law, however, HOA Boards are obligated to take appropriate affirmative action on behalf of the Association and its membership, and can trigger significant legal and financial liabilities for themselves and their Associations by either failing to act or by taking actions beyond their limited authority as directors.

The governance of an HOA is not simply a matter of winning an election and proceeding with a self-perceived “mandate” until the next election. Many Associations have learned the painful lesson that California courts can and will carefully examine a Board’s decisions and actions to determine whether they are authorized by the CC&Rs and whether CC&R mandated decision-making procedures were followed. Only then will a California court grant “judicial deference” to the actions or decisions of an HOA Board of Directors.

The touchstone of legitimacy for HOA Board actions is always the CC&Rs. Courts will not second-guess any decision that the CC&Rs specifically authorize the Board to undertake, but will generally give no deference at all to a Board’s interpretation of the CC&Rs themselves. Thus, if there is any prospect of controversy, the prudent HOA Board will consult with its counsel to ensure that a contemplated action or decision is a matter upon which the CC&Rs has granted the Board such authority. If a Board is subsequently found to have taken unauthorized actions that caused economic losses to an Association member, significant financial liability for the Association and the individual Board members may arise.

While the authority to act is the stepping off point for any HOA Board undertaking, the process by which the decision itself is reached will also impact whether it is entitled to judicial deference. Simply stated, if the CC&Rs specify a process, procedure, timeline or sequence of actions that a Board must take, the failure to strictly follow that process will delegitimize the resulting decision.

HOA Boards also should understand that only Board decisions are subject to protection through judicial deference. If the Board specifically delegates a decision to its property manager, that decision is not protected because it was not a decision or action by the Board itself. This can be a significant source of risk when managers are delegated maintenance responsibilities.

The fairness and reasonableness of the decision-making process also will be considered by a court in deciding whether to afford judicial deference. The requirement of fairness permits judicial invalidation of decisions that are discriminatory or biased, including decisions by Board members with conflicts of interest in the subject matter. The requirement of reasonableness allows judicial invalidation of summary decisions that are not made with due inquiry and full consideration of the issues or circumstances. HOA Boards should be particularly careful to avoid what might be viewed as “knee-jerk” denials of membership-driven requests.

Finally, in these difficult economic times, it is important that Board decisions to “take no action” also be made only with due inquiry and fair consideration to ensure that they survive subsequent legal challenge. If non-action is determined to be in the best interests of the membership in light of all available options, the basis of that conclusion should be well documented in the Association records. The worst things an HOA Board can do is ignore a problem or continually put off making a hard decision.

Yes, yes, we see that sort of thing from our elected politicians all the time. But HOA Boards have no such option to do nothing, and that is why your Homeowner Associations keep functioning, even without complete unanimity of purpose among the membership.

Allison Andersen

By Allison L. Andersen, Esq.
Northern California Managing Partner
Fenton, Grant, Mayfield, Kaneda & Litt


10 Reasons Why You Should Stage Your Next Listing

By Audra Slinkey, Home Staging Resource Sometimes it can be a challenge convincing the home seller to use a certified staging professional so I created some visuals using the latest, 2014-2015 statistics to assist agents in getting the point across to their clients. Professional home staging is not only for homes that are a “mess” but […]

Protecting Committees

QUESTION: I know that board members are legally protected but what about committee members (like a rules committee, newsletter committee, finance committee, etc.)? Are they also protected under the Civil and Corporations Code?

ANSWER: Unfortunately not. By statute, board members have a higher level of protection but the same is not true for committee members. They do, however, frequently have protections under the association’s governing documents and and its insurance policy.

Advisory Role. One way to reduce potential liability is to make sure your committees are advisory only. Without decisionmaking authority, they make a much smaller target. Two exceptions to advisory-only committees are executive and architectural committees. The first is made up entirely of directors and the second derives its authority from the governing documents. The surest way to protect all volunteers is for the association to purchase insurance to cover them.

RECOMMENDATION: Proper D&O Insurance is a must. Make sure your association’s policy covers committee members as well as board members. Adopt an ethics policy so committee members know what constitutes proper and improper behavior. And, adopt committee charters so members know they are advisory only. Finally, if your governing documents are silent about protections for committee members, you should consider amending your documents.

WHEN A
DIRECTOR SUES


QUESTION: Our HOA has only five owners and all owners are on the board. Can an owner, under the D&O coverage, sue the board for an issue as an individual owner? My thought is that you can’t sue yourself, yet they wear two hats…board member and homeowner.

ANSWER: Yes, a director can sue his association. Your D&O insurance may deny coverage but it does not prevent him from suing.

Suing Himself. You’re right that, as a practical matter, your fellow director is suing himself when he sues the association. He can do it because, from a legal perspective, he is not suing himself. He is suing a separate legal entity–the association.

ADR. Before your unhappy director can sue, he must first determine if the governing documents require binding arbitration rather than litigation. If so, he must follow the governing documents. If your documents are silent, the plaintiff can go into court. Depending on what he seeks and why, the Davis-Stirling Act may require that he first endeavor to submit the dispute to alternative dispute resolution.

Recusal. During the litigation, the plaintiff director must recuse himself from any discussions or votes related to his lawsuit. If he refuses, the board can form an executive committee (minus the plaintiff) to work with the association’s attorney on the lawsuit. If the governing documents prohibit a director from serving while in litigation with the association, the board can vacate his seat.

Insurance. A consideration for the plaintiff is that the association’s insurance may refuse to defend. Some insurance policies exclude coverage if one director sues another director. D&O insurance is designed to protect directors from third-party claims, not infighting between directors or claims against current or former directors for imprudent business practices. This is known as an “Insured vs. Insured” exclusion.

Special Assessment. If the carrier denies coverage, the membership could be specially assessed to raise the funds needed to defend against the action. If that happens, the plaintiff may find himself an outcast. He should be careful about pooing where he eats.

RECOMMENDATION: The board should avoid litigation and make every effort to work out their differences.

Thank you to Mike Rey of the Mike Rey Insurance Agency for his input on this issue.

FEEDBACK

Droughts make people do funny things. As Mark Twain observed, “Whiskey’s for fightin’…water’s for killin’.” Let’s hope we don’t have any of either as HOAs deal with the drought. Following are a few more comments from readers.

Water Bills #1. Our docs allow the board to implement water saving measures, which could mean installing individual water meters per unit. Unfortunately, most multiplexes have several water line entry points into the unit–one for kitchens, another for bathrooms, etc. Thus, a single meter isn’t possible. I think the state needs to mandate that all new multiplexes being built have a separate meter for each unit. -Joseph L.

Water Bills #2. Our association had water meters put in at each townhouse which seems the fair way to go. We pay for our own water usage. -Suzy P.

RESPONSE: Fortunately, townhouse construction has a single line entering the unit. In your case, submetering makes sense. As noted by Joseph L., it may be impossible to retrofit condominium complexes with submeters.

Water Bills #3. Great drought map link. Thanks. -Scott C.

Water Bills #4. (Concerning the fairness of billing owners for their water usage by the number of residents in each unit…) The elderly lady may not use the pool but she still pays for it. -Don H.

RESPONSE: True. But the pool enhances her property values and she and her guests can use it if they choose to. Moreover, her assessments are not increased by the number of people using the pool whereas the number of people living in a unit directly affects water usage (and monthly dues).

*****

Drought. I noticed the freeways were being watered. -Suzy P.

RESPONSE: You shouldn’t be critical of the state–they are trying to grow more freeways.


Adrian Adams, Esq.
Adams Kessler PLC

“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.