Author Archives: Davis-Stirling Condo Law

Director Salaries

QUESTION: Are we allowed as homeowners to view the salaries of directors?

ANSWER: Yikes! Directors are not supposed to receive salaries. Let me clarify that…directors are allowed to earn a living, just not from the association. Board members are supposed to be volunteers. If they are paid directors, they lose the protections afforded volunteer directors. Another problem is that if they voted to give themselves salaries, it’s a conflict of interest.

Disclosure. If directors are paying themselves a salary, members have a right to know. The association’s financial records should fully disclose and track any monies paid to directors.

RECOMMENDATION: Your association should immediately cease paying its directors.

CORPORATE vs HOA
PROXIES

QUESTION: Corporations Code §7613(a) states that “Any member may authorize another person or persons to act by proxy…” This appears to conflict with Davis-Stirling which says a proxy can’t be given to a renter. When Davis-Stirling and Corporations Code conflict, which one governs?

ANSWER: In this case, the Davis-Stirling Act controls. The Corporations Code is generic to all corporations and not all associations are corporations. (Civ. Code §4800.) The Act is specific to common interest developments, whether incorporated or unincorporated. (Civ. Code §4200 & §4805) The Act does not mention renters. Instead, it states that if a member wants to give someone a proxy, the recipient must also be a member of the association. (Civ. Code §5130(a)(1).)

COULD’A, WOULD’A,
SHOULD’A

Nothing lasts forever! Bart Mendel of Stonemark Construction Management and I will provide real life examples of the legal and financial impact of unreserved “lifetime” components.

Many building elements are routinely overlooked by boards and managers when it comes to maintenance and reserves. These turn into huge special assessments. In addition, simple protective measures are ignored that later erupt into litigation. What you don’t know can cost you a fortune. If only you could’a, would’a, should’a.

The program will be held at the Courtyard Marriott, 15433 Ventura Blvd., Sherman Oaks on Wednesday, May 21 from 11:30 a.m. to 1:30 p.m. You can register online at www.cai-glac.org or by telephone at (818) 500-8636. Managers can earn 1 hour of continuing education credit.

FEEDBACK

Drones #1. If you write a rule prohibiting drones, I would add that you can get permission from the board, that way a home owner selling a house can get permission to get a drone shot. Keep in mind places like Yosemite have prohibited drones but you can still get a limited permit if you are filming for commercial purposes. -Finn M.

Drones #2. All people have an expectation of privacy to their backyard and inside their home. Should an HOA provide rules; perhaps the rules should be to not fly drones outside of where UPS Brown can walk. In other words, drones may fly in common areas of the association and not in areas where expectation of privacy areas exist (backyards), and not in areas that create a nuisance outside of common areas of the interior boundaries of the HOA (within 5 feet of a building window), no drone may record inside any homeowners home (in reality, if the window is not covered and one can see in from the street, there is no expectation of privacy). -Ted S.

Drones #3. I was thinking that we might use drones for property inspections in the future. Like a carrier pigeon. We can send it out and get info. It would be easier to look at slopes and violations. -Meigan E.

RESPONSE: Provided they meet local, state and federal regulations (if there are any), an association could use drones to inspect for rules violations. However, I suspect there would be push-back from the membership.

*****

Nuts #1. I am new to an HOA board and I love the experience. So far, your newsletter has been extremely valuable to me. Even where we do not face a specific issue you address, the spirit and approach has general application. Above all, I have learned that we can address problems with a sense of humor. People are wonderful and so are their ways and if they are not so great today, they will be better tomorrow. I liked your comment to the person who didn’t like the use of the word “NUTS”. You stick to your guns. Right on. Nutty is as nutty does. It is nice to know that it is a “respected legal term.” At this moment we seem to be nut-free. I know there could be a one lurking just around the corner or over the horizon. Perhaps my time will come. -Earl R.

Nuts #2. I agree, one “nut” even in a large HOA can be stressful for the board. If you have legitimate grievances you should find out what your HOA’s governing documents say, check the law (of course, www.davis-stirling.com is the perfect resource) and then bring up your concern with your board (needless to say, in a calm, respectful manner). If all else fails, run for the board (put your money where your mouth is). -Alice O.

Nuts #3. Find the one owner who believes the word “nuts” is “offensive” “unprofessional” and “poor business ethics” and you’ve likely found the “there’s always one person in an HOA who creates problems.” I will now replace the use of “nuts” in all my legal pleadings with “trail mix” if that is more PC? Wait, PC is offensive to us Mac users. Nuts! Whoops, I meant “trail mix” -K.A.

Nuts #4. Small versus large associations struck home with me. I’ve been on the board since the Earth cooled and we went through a hellacious legal battle with a certified lunatic who sued the board. It was finally settled. Small is wonderful and easy when it works. God forbid you get a sociopath as a neighbor. -Dave W.


Adrian Adams, Esq.
Adams Kessler PLC


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

Drones

QUESTION: Our neighbor’s teenage son has been flying a drone over houses in the neighborhood, including our swimming pool. This is an invasion of my privacy. Can the board do something to stop him?

ANSWER: Privately operated drones are increasingly in the news because of the noise they make, the danger they pose to commercial air traffic, and invasion of privacy issues (many carry high definition cameras). Last week, the National Park Service banned drones in Yosemite. Visitors were using them to photograph the park and climbers on Half Dome. Noise, safety and privacy issues were factors in the Park’s decision.

Restricting Drones. The same concerns raised in the Yosemite ban can be the basis for prohibiting drones in community associations. Restrictions can be implemented through amending CC&Rs or through a rule change. Adopting a rule is much easier than amending the CC&Rs since it can be done by the board after a 30-day notice period. However, a CC&R amendment is easier to enforce if an HOA needs to go to court.

City and County. Any ban adopted by an association would apply only to members, residents and guests. If drones are being flown through the development by people outside the association, the board’s options are limited. The HOA would need to go to the city or county to seek a ban.

RECOMMENDATION: I recommend that boards start with a simple rule change. At some point when they update their CC&Rs, they can include the restriction. If your association needs assistance, contact us.

FEEDBACK

Small HOA #1. Even one nut-job in a small association can be incredibly stressful and divisive…1/8th of the membership. You’d have to have over 60 of them in a 500-member association to have the same impact. We had two (a husband and wife) who did plenty of damage and two years later their impact is still felt. What the board learned from this is communicate, communicate, communicate! Newsletters, face-to-face, e-mails, phone calls, these all help owners feel connected and, in most cases, positive. -Nancy H.

Small HOA #2. I liked this article and your opinion. I was secy/pres for both a large and small HOA. I also created a 501(c)3 organization with a large annual event. I learned what I termed the a__hole factor, i.e., for every 100 people I could count on one person to be a problem. For a 1,000 to 3,000-person event, the ratio stayed the same. I also learned to factor this ratio into how much security I needed. -Michael M.

Small HOA #3. You used the word “NUTS”. Not only is it offensive but unprofessional and reflects poor business ethics! -Alexis C.

RESPONSE: “Nuts” is a respected legal term. You never know when you will run into them and every association suffers through at least one at some point in their existence.

Small HOA #4. I’m certainly not a serial killer but I do live in an 85-unit HOA and find myself impelled to assume the roll of activist. Does that make me a “nut-case” or a “crazy” because I insist that our board not make up rules on the fly and not govern under the cloak of secrecy? -Sam R.

RESPONSE: Someone who legitimately challenges improper board action is an asset to the community. How they go about challenging board authority, however, can put them into the “crazy” category. I had one nut smearing dog feces on a board member’s window. Another was leaving used condoms on the front door of the board president. I’m sure both thought they had legitimate grievances. Both were nut-cases.

*****

Thank you to everyone who responded to the story of my parents. There were too many to print them all. Following is a sampling.

Wedding #1. I loved the story of your parents’ meeting. What a lovely way to start my Sunday morning, reading about them. -Astrid L.

Wedding #2. Wow… great story! Nice of you to publish it. -S.D.

Wedding #3. Beautiful, beautiful story about your parents. Thanks for making my day! -Jan M.

Wedding #4. What an amazing story! Thank you for sharing it with us. The many current and past board members of our association appreciate your weekly newsletter, appreciate this story even more! -Neda F.

Wedding #5. Good for you, leaving the HOA business for just enough time to give air to a love story. I was moved. Bless you Adrian for being open to the reality of love, in a world too often seems devoid of it. -R.N.

Wedding #6. Happy Anniversary to your Mom & Dad. Quite a great story of how they met. Funny how life works out that way! -Dan F.

Wedding #7. I loved the story about your parents…it made my morning start on a happy, sweet note. My parents were married almost 67 years before my Mom passed away. They were so in love…my father said he knew she was the one when she went riding by on her bicycle at 10 years old…they were married when they both turned 21. It was a lifetime love affair. Weren’t we the lucky ones!! -Barabra S.

RESPONSE: Love stories that last a lifetime seem so rare now. You’re right, we are the lucky ones.


Adrian Adams, Esq.
Adams Kessler PLC


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

Small Associations

QUESTION: I am a board member for an 8-unit association. Perhaps you can help me with some questions: (1) Do smaller associations have fewer disputes or legal problems? (2) Is governance different from that of a large association?

ANSWER: There are distinct differences between large and small associations. When it comes to disputes, large associations have more of them but small associations experience greater suffering when conflicts erupt.

Critical Mass. Whenever you put people together, you have potential for conflict. The more people, the more conflict. You have more nut-cases in a 500-unit association than a 50-unit, and a 50-unit has more than a 5-unit. The other factor is density–the tighter people are packed together, the greater the friction. If you put 500 people into single-family homes with 20-foot setbacks, there are very few neighbor-to-neighbor disputes. If you stack people on top of each other with nothing more than a wall or ceiling separating them, you suddenly have a lot of squabbling over pets, parking, noise and water leaks. It’s like uranium, if you pack enough of it into a confined space, you get an explosion.

Resources Help. Because small associations are small, they have fewer people. With fewer people, there is less chance of a crazy living in the development. The disadvantage of a small association is its lack of resources. If an 8-unit gets a Ted Bundy in their midst, they have no way of stopping him. He can terrorize his neighbors and cripple the association’s budget. Large associations have the benefit of healthy budgets that allow them to hire legal counsel and professional management to address disruptive homeowners. The intimacy of a tiny association is wonderful when it works and a nightmare when it doesn’t.

Governance. It’s been my experience that governance of small associations is more casual and more consensus driven. If there are only a handful of families, they get together, discuss a matter and make a decision. The opposite occurs with large associations. The larger the community, the more formal meetings become with directors setting policy and others handling the details, e.g., professional management is employed, legal counsel hired and consultants retained. See factors to consider when Buying a Condo.

WEDDING ANNIVERSARY

I recently asked my mother how she met Dad. She sent me the following:

April, 1951—Corning, Arkansas. Your grandfather Herb brought your grandmother Josephine to our little hospital in hopes of finding a cure for her cancer. He ate at the diner where I worked. He was NOT one of my favorite customers. After looking over our menu, he asked if I had frog legs and I said “NO I just walk that way.”

A few days later I asked my boss, “Who is the stranger in the booth by the jukebox?” She said he was Herb’s son, Don. I replied, “I don’t like him either.” She said, “I bet you 50 cents you can’t get a date with him” (big money back then). I said “You’re on.”

I kept filling Don’s coffee until he asked if he could walk me home. I said “Sure” knowing I would win my bet and collect 50 cents. He then asked if I would go to the movie with him the next day. I was already engaged to a high school sweetheart and needed to politely get rid of Don. I said sure if he would go to church with me, knowing he would decline.

To my surprise he said “Okay.” What was I to do? I was already engaged and my mother would not approve of this. In a panic, I called my friend Mary and she agreed to go with us. That way people would think Don was with her.

One week later your Dad let me drive your Grandpa’s Packard and to my surprise and delight he kissed me on my cheek. I saw stars, bells went off in my head and I knew this was the one for me.

One week later we drove 12 miles to the town of Pocahontas to get married. I was only 17 and in Pocahontas I could say I was 18 and no one would know. We were married on May 5. My fiance cried when I gave back his ring and told him I was married. On May 18 I graduated from high school and on May 19 we left for California. That was 63 years ago and six children followed. -Mom

HAPPY ANNIVERSARY. Happy Anniversary Mom and Dad! And Happy Anniversary to readers with 60+ years of marriage. That’s quite an accomplishment.

FEEDBACK

Unrecorded Title #1. Family Code §760 provides that “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.” Even if formally titled in the name of one spouse alone, real property acquired during marriage is presumed community property, with the non-titled spouse having a 50% legal ownership interest in the property. Notwithstanding the presumption of FC §760 referenced above, the “owner of record” made it clear to the HOA that his/her spouse was, in fact, also an owner by virtue of the deed provided to the HOA, which included his wife’s name. There is NO legal requirement that the transfer document be recorded to be valid, referencing your own laundry list of requirements as to what constitutes a valid transfer. Recording only “perfects” an ownership interest; it does not “create” it. -Barry P.

RESPONSE: Community property comes into effect primarily in divorce and death. When it comes to real estate, some rights immediately flow to a person on title while others emerge at a later date to those with community property rights. Also, while community property might be presumed, such rights are not guaranteed–prenuptial agreements may have been signed. Accordingly, it is reasonable for associations to limit voting rights to members, i.e., those who are on title.

Gun Control. California does not prohibit shotguns or rifles from being openly carried unloaded in vehicles to and from hunting areas and ranges. I do not think that HOA boards can legally deny a Concealed Carry Weapon permit holder the right to carry at any meeting–only recommend or make a new rule that no one shall possess or bring to the meetings any firearm for any reason and to do so will result in expulsion from the meeting. However nothing short of having a private security guard at the door checking everyone will prevent a weapon from getting into a meeting. -B. Stelter

Trash Privacy #1. The Greenwood case only held that police did not need a warrant to search trash containers once they were off private property, not that they are fair game for one and all. If you see strangers pawing through trash, you can call the police, since the person may be up to no good, it is likely a law is being broken. -Ronald S.

Trash Privacy #2. Aren’t most condo garbage bins contained on their property, which is private and not public, making it illegal to rummage through them? Also, our police department says it is illegal to dumpster dive. -P. Calloway

RESPONSE: It’s true that some municipalities have an ordinance against dumpster diving. It’s not clear how that affects private communities regulating their own trash bins. Nor does it address trash bags that don’t make it into the dumpster, and bags that spill their contents onto the ground (the subject of the original question). If staff members have to clean up a mess caused by a careless homeowner and the owner’s phone records are part of the trash, there are no privacy violations for someone to pick up the records and notify the board of the culprit.


Adrian Adams, Esq.
Adams Kessler PLC


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

Unrecorded Deeds

QUESTION: An owner of record sent me an unrecorded deed showing that he put his wife on title. Does an unrecorded deed make his wife a member?

ANSWER: Not necessarily since ownership may not have transferred. At this point, it is impossible for the board to know whether the wife is a member or not.

Membership Defined. As provided for in Civil Code §4160, membership is tied to ownership of a separate interest in a common interest development, e.g., a condominium or lot. Transfer of real property requires the following:

  1. It must be in writing;
  2. Parties must be properly identified;
  3. Parties must be competent to convey and receive property;
  4. The property must be sufficiently described to distinguish it from other real property;
  5. There must be granting language;
  6. The deed must be signed by the conveying party; and
  7. It must be delivered and accepted.

Determination. “Delivery” means more than giving someone physical possession of a deed. In the situation you described, the husband must have the intention to immediately pass title to his wife. For all you know, the unrecorded deed is nothing more than a ruse by the husband to get his wife on the board. There are two ways to determine if a valid transfer occurred: (i) a ruling by a court or (ii) a recorded deed. Obviously, a recorded deed is the only practical option for associations to know whether ownership actually transferred.

RECOMMENDATION: In my experience, the only time someone waives around an unrecorded deed is to put an unqualified person on the board to cause problems for the association. Whenever proof of membership is at issue, associations should require a recorded deed. I routinely include the requirement when I restate governing documents. Contact me if you have any questions.

INSPECTING
GARBAGE

QUESTION: Our condos have an ongoing problem with residents not placing their garbage bags properly into the bins. This creates a mess when workers move the bins because bags break and spread garbage around. Can the board inspect the bag’s contents for the purpose of identifying who is causing the problem?

ANSWER: Yes you can. People have no reasonable expectation of privacy when they put their trash in a public area. (California v. Greenwood, 486 U.S. 35 (1988).) Trash collectors, the homeless, neighbors, the police, anyone can go through garbage once an owner puts it in a trash bin. Therefore, a board can go through the trash to identify who is causing the problem.

RECOMMENDATION: Board members or staff digging through trash is unsanitary and unseemly. If you want to catch scofflaws, you should install a camera in the trash area. Don’t use hidden cameras. Highly visible cameras help deter bad behavior. Hidden cameras not only offend people, they reveal things you may not want to know.

FEEDBACK

There were too many responses to our gun control article to print them all. Following is a sampling:

Gun Control #1. Gun control in an HOA? WOW! The HOA police need to remember community harmony. You might as well walk around with a big target on your back and a sign that says shoot me. There is no other way to piss off someone than to tell them they can’t have something that they are entitled to. How are you really going to patrol this without violating someone’s protection against search and seizure? There are much better ways to handle this if one feels threatened; call the police and report it. Do I need to say REALLY! -Ted S.

Gun Control #2. I have to share that in one community we had to pass the “no guns at association meetings” rule. Who wants to be a board member arguing with someone wearing a .357? -Mark J.

Gun Control #3. I am an avid shooter and reload for both pistol and rifle. That means from time to time I have small amounts of smokeless gunpowder. A gun enthusiast who shoots muzzle loading weapons could have black powder, a dangerous class-A explosive. If he stored a lot of it in original containers and a fire reached them, there would be an explosion. If a board learns that a resident has black powder, they should require it be stored in a fire-proof box. This is a reasonable and customary precaution and would be in the best interest of all residents. -John A.

Gun Control #4. Good article. As a conceal carry holder in California and a former law enforcement officer (and retired infantry officer), I enjoyed your comments very much. I think that restricting residents from carrying firearms in the common areas is problematic. The association would need to provide a way for the gun owner to get the firearm to the separate interest. Since California no longer offers open carry, I guess locked in a container you can transport would suffice. I don’t see how they could enforce a pure prohibition that did not at least allow folks the ability to get the gun to and from their home in a concealed manner. -Roy H.

*****

Longest Serving Director #1. Our secretary has been on our board of directors for 25 years. He is 86 years young. I enjoy your newsletter it is very informative. The president and I subscribe to it. We always discuss articles that sound like some of the stuff we have going on. Keep up the great newsletter. -June-Ella B.

Longest Serving Director #2. Meadow Bay North is has 125 units and was built in the early 70s. Eddie Evans, an original owner, has been on the board since 1980. His 34 years may be a record. Eddie has also been board secretary for at least 25 years. -Dan W.

Longest Serving Director #3. The home my parents purchased in Lake San Marcos has a 5 member board. One of the original owners, who signed the original recorded CC&Rs in 1964, has just stepped down for the first time this past month at the age of 94. My parents have now passed on and I have taken on this board position. We thank Gus Kroger for all his years of service at Mall 1 Lake San Marcos. I think he may be the longest living board member! -Kaye D.

RESPONSE: Congratulations to all long-serving directors. Their dedication to their communities is quite amazing. A special congratulations to Gus Kroger for his astonishing 50 years of service!


Adrian Adams, Esq.
Adams Kessler PLC


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

Gun Control

QUESTION: Does the board have the right to ask residents to declare if they own a gun and what kind? Don’t we have 2nd Amendment rights?

ANSWER:
The Second Amendment to the U.S. Constitution guarantees the right of citizens to possess firearms. However, the right is subject to reasonable regulation. (Dist. of Columbia v. Heller (2008) 554 U.S. 570, 626-27; governments allowed to impose narrowly prescribed and reasonable restrictions on guns.) For example, you cannot carry a firearm on a commercial airliner. If airport screeners find one, you won’t be boarding the plane. Reasonable regulation of firearms also applies to HOA common areas.

Common Areas. In Nahrstedt v. Lakeside Village, the California Supreme Court stated that “use restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangement.” And, associations “may limit activities conducted in the common areas as well as in the confines of the home itself.” Accordingly, associations could restrict residents from carrying or brandishing firearms in the common areas. The restriction would be deemed reasonable since California Penal Code §25850 already prohibits carrying a loaded firearm in public.

Handgun Ban. Although HOAs can regulate handguns in the common areas, any attempt by a board to ban handgun ownership would be struck down. The U.S. Supreme Court overturned a Chicago ban on handguns in McDonald v. City of Chicago (2010) 130 S. Ct. 3020.

Registration. Can a board require residents to register their guns with the association? Probably not. There is no safety or security benefit to registration since HOAs cannot license or ban gun ownership.


Wayne Louvier, Esq.
Adams Kessler PLC    

Moreover, California Penal Code, §25605(b) provides that no permit or license to purchase, own, possess, keep, or carry, either openly or concealed, shall be required of any citizen of the United States or legal resident over the age of 18 years. While this statute applies only to government registration of firearms, it shows a public policy against registration. In Nahrstedt, the Supreme Court used public policy as one of the criteria for judging the reasonableness of a restriction.

CONCLUSION: A court would likely deem registration of firearms to be inconsistent with public policy and invalidate the HOA requirement.

NEW ROOF FOR
DAUGHTER

QUESTION: My daughter recently purchased the condominium next door to me. The issue of a new roof for that unit in on the agenda for our next meeting. I have no financial interest in my daughter’s unit. Do I need to recuse myself from voting on the roof for her unit? I am president of the board.

ANSWER: Even though you may be fulfilling your duties to the association by approving needed roof repairs, you do not want to give the appearance of impropriety. If you don’t recuse yourself from the vote, people will assume you are inappropriately using association monies to benefit your daughter. Whenever faced with an apparent conflict of interest, the safest course of action is to step out of the meeting and let the remaining directors vote on the issue. It insulates you from accusations from those who like to stir the pot.

FEEDBACK

Spouse on the Board. Does the spouse always come with the pronoun “she?” -Judith K.

RESPONSE: That’s the case from a man’s point of view. You know how they have a one track mind.

Longest-Serving Director. Our board president frequently introduces me as “the longest-serving board member in California.” Is he correct? I was elected in 1980 and have served continuously since then in every capacity. We have had an incredibly cohesive board since the very beginning, with hardly any private agendas. It has been a privilege and a lot of fun to serve! My current position (besides Secretary) is Historian! -Linda G.

RESPONSE: Kudos for your service to the community! Your cohesive, well-functioning board will be envy of many. You may indeed be the longest continually serving director in California. We’ll see if my readers know of anyone who has served longer.


Adrian Adams, Esq.
Adams Kessler PLC


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

Collection Statute of Limitations

QUESTION: What is the statute of limitations for collecting delinquent assessments?

ANSWER: Statutes of limitations (SOL) are laws that restrict the time period within which legal proceedings may be brought. For example, if a driver runs a red light, the state can’t wait twenty years to prosecute the infraction. For traffic violations, the state has one year to take legal action, otherwise time runs out and legal action is no longer allowed.

Protect the Accused. This legal concept is designed to protect defendants from unfair prosecution. If the government drags its feet prosecuting a crime, evidence to defend the accused may be lost with the passage of time, i.e., memories fade, witnesses die and documents are lost. Protecting the accused also applies to private grievances, which are referred to as civil actions. (When the state takes action, it’s called a criminal proceeding; when a private individual seeks redress for damage, it’s called a civil action.)

Collecting Debt. There are different statutes of limitations when it comes to collecting debt. If money is borrowed and a promise made orally to repay the debt, the statute of limitations is two years. (Code Civ. Proc. §339.) If parties enter into a written agreement, the SOL is four years (Code Civ. Proc. §337). When the obligation is the result of recorded restrictions, e.g., an obligation created by CC&Rs, the SOL is five years. (Code Civ. Proc. §336(b), Pacific Hills HOA vs. Prun.) Accordingly, an association has five years to initiate action to collect delinquent assessments. However, if a court views the obligation as a written contract, the SOL is four years.

RECOMMENDATION: There seems to be some uncertainty as to whether the SOL for delinquent assessments is four years or five. Regardless, boards should not be waiting years to collect a debt owed to the association. Uncollected debt is harder to collect the older it gets. Plus, it burdens the membership who must make up the difference in the budget and it skews an association’s financial statement. If it’s bad debt, associations should write it off. If it’s collectable, boards need to pick a collection method and pursue the debt in accordance with the association’s collection policy.

Thank you to Wayne Louvier and Richard Witkin for their input on this question. NOTE: Adams Kessler offers all forms of debt collection. Contact us for more information.

SPOUSE ELIGIBLE TO
SERVE ON BOARD?

QUESTION: If a single person buys a unit and then later marries but does not have the deed to the property changed to include the spouse, is the spouse eligible to serve on the board of directors?

ANSWER: Whether the spouse can serve on the board depends on director qualifications contained in your bylaws. If your bylaws require that all directors be members of the association, then the spouse is not eligible to serve on the board because she is not an owner.

Percent Ownership. Although not true in all cases, a great deal of mischief can be done by those who get around membership requirements by transferring a 1% interest or even half of 1% to a spouse so that person can serve on board. They often have a personal agenda and can be disruptive and unreasonable until they get what they want. Hence, our firm (i) includes a minimum ownership requirement of 10% when we amend bylaws to add director qualifications and (ii) disallows co-owners from serving on the board at the same time.

FEEDBACK

Free Speech #1. I love reading your newsletter please don’t stop. -Denise E.

Free Speech #2. You failed to mention that the First Amendment is a check on governmental censorship and not private action. The reason the HOA cannot regulate possession or viewing of porn in private is the right to privacy under the California Constitution, not the First Amendment. I agree that when the viewing of porn spills over into the common area or interferes with another’s right to quiet enjoyment, the HOA can regulate it. -Bill R.

Free Speech #3. “Do members have the right to watch porn in the privacy of their units? Of course.” However, this in-home porn watching does not extend to child porn. Under federal law, 18 USC 2252 and 2252A, the mere possession of child pornography–book, magazine, periodical, film, videotape, computer disk, or any other material that contains an image of child pornography–could land the possessor in prison for up to 10 years (first offense) and 40 years (if prior sex-related conviction). -Barry P.

*****

Drunk Board Member #1. Adrian…”elect them to Congress”…very funny, cannot stop laughing! Well said my friend. -Paul P.

Drunk Board Member #2. Now we know where those people in Congress come from! That explains a lot! -Trudy M.

Drunk Board Member #3. Excellent reply to your last statement! Keep up the good humor! -Doris Y.

Drunk Board Member #4. Love your response about sending the crazy ones to Congress but there is one problem–they sometimes come back and become Mayor of San Diego! -Gerie V.

*****

Thank You. Just wanted to thank you for your newsletter emails updating us homeowners’ association members across the state who have apathetic boards of directors. Our board is dominated by non-resident owners who say “no” to everything. Your work is important to keep us informed about our rights, solutions, and legal standing. -Charles H.


Adrian Adams, Esq.
Adams Kessler PLC


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

Free Speech and Porn

QUESTION: Our HOA held an election but never received the results. I heard about it through the grapevine. I emailed the board and never received a reply. I was of the understanding that election results are supposed to be published.

ANSWER: By statute, the results of an election must be reported to the membership and recorded in the minutes of the next meeting of the board. Failure to do so is a violation of the Davis-Stirling Act and the court may, but is not required to, void the election for the failure to report election results. (Civ. Code §5145(a).) The violation also makes the association vulnerable to monetary penalties of up to $500 per violation. (Civ. Code §5145(b).) If someone challenges your election for failure to report the results, the court is more likely to fine the association than void the election.

ONE VOTE PER ISSUE

QUESTION: Our HOA is having board elections. There are three vacancies. Our manager tells us that each unit can cast only one vote, not one for each vacancy. I’ve never heard of such a thing.

ANSWER: There may have been a miscommunication by the manager. Members are allowed one vote per open seat. If there are three open seats, members have three votes. If there are five candidates, members can vote for three of the five candidates. The Inspector tallies the votes for all five candidates and the three with the highest number of votes win.

Cumulative Voting. If you have cumulative voting, members can cast all three votes for one candidate. Because cumulative voting has a way of complicating elections–I recommend amending bylaws to get rid of it.

CALIFORNIA LEGISLATIVE
ACTION COMMITTEE

This weekend I am attending “Legislative Day at the Capitol” along with two other attorneys from my office, Gary Kessler and Jasmine Fisher.

Balancing Controls & Rights. The event is put on by the Community Associations Institute’s California Legislative Action Committee (CAI-CLAC). This nonprofit committee monitors legislation and advocates a reasonable balance between state control and the ability of homeowners to govern themselves through their community associations. CLAC supports good bills and opposes bad ones.

Costly Bills. For example, one of the bills introduced this year would drive up legal expenses for associations and their members. Currently, members have a low-cost way to resolve disputes through Internal Dispute Resolution (IDR). Like small claims court, this informal “meet and confer” process excludes lawyers. AB 1738 undermines this popular consumer protection by introducing lawyers into the mix.

Protecting Consumers. To protect members and associations from the expense and elevated risk of litigation created by this bill, CLAC will advocate for preserving the right to low cost dispute resolution. I will keep you updated on this and other bills as they make their way through the Legislature.

ORANGE COUNTY OFFICE
OPENED

I am pleased to announce the opening of our Orange County office effective April 1, 2014. Attorney Wayne Louvier is heading-up the office and will oversee legal services for our clients in Orange County and San Diego. The address is:

Adams Kessler PLC
18101 Von Karman Ave., Suite 330
Irvine, CA 92612

Contact us at: (800) 464-2817 or info@adamskessler.com.

FEEDBACK

Drunk Director #1. Adrian–gotta raise a toast to your rider about allowing directors to tipple after contentious encounters with members during meetings. That makes serving on the board somewhat worthwhile. Thanx for the lighthearted approach. -Robert M.

Drunk Director #2. Good advice on how to deal with a drunk board member, especially the last paragraph. But, how should a board deal with a member who obviously is missing a few nails?? -Wayne W.

RESPONSE: There is no easy answer. The crazy ones drive up an association’s legal expenses, frustrate directors and torment managers. I suppose if all else fails, you could elect them to Congress.


Adrian Adams, Esq.
Adams Kessler PLC


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

Drunk Board Member

QUESTION: What do you do about a board member who shows up drunk at meetings?

ANSWER: To avoid personal liability for their actions/decisions, directors must perform their fiduciary duties “with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.” (Business Judgment Rule.) That standard is hard to meet when a board member is DUI (Director Under the Influence).

Reckless Indifference. As with drunk drivers, a drunk director is not competent to get behind the wheel. Their impaired judgment is self-induced and could be deemed reckless indifference or deliberate disregard of their obligations to the membership and an abdication of their duties as a director. Such behavior is specifically excluded from protection by Corporations Code §204(a)(10)(iv)&(v), i.e., it exposes the director to personal liability.

Fellow Directors. What impact does it have on fellow directors? The worst case scenario is the drunk director gets into a fight with and seriously injures a homeowner at a board meeting. The injured owner then sues the board for not previously taking action against the inebriated director. While the likelihood of success against all directors would depend upon foreseeability of the impaired director’s actions, the lawsuit would certainly succeed against the problem director. The plaintiff would also prevail against the association since the director’s actions occurred while in his official capacity.

Censure. If the board does nothing, it has the effect of condoning the director’s bad behavior–something that would certainly be used against the board at the time of trial. To protect themselves and the association, fellow directors should warn the impaired director to go home and sleep it off and never again appear at a meeting intoxicated. If the bad behavior continues, the board should censure the director.

Removal from Office. If the director is an officer (president, secretary, treasurer), he can be removed from office by fellow directors. Unseating him from the board however, is not an option unless the bylaws specifically authorize it. That is something normally reserved for the membership via a recall.

Ethics Policy
. If boards have not already done so, they should adopt a “Code of Conduct” or “Ethics Policy” to address these kinds of situations. I posted a sample policy on the website. It gives fellow directors something to reference when talking to a wayward director (or censuring him/her).

NOTE: If you adopt an ethics policy, be sure to include an exception that allows directors to get drunk after meetings where they have to deal with particularly difficult homeowners.

CANG N. LE, ESQ.
JOINS ADAMS KESSLER PLC

I am pleased to announce that Cang Le has joined Adams Kessler PLC. Having been raised in the Inland Empire, Cang will head-up our Riverside office.

Experience. Cang has broad experience representing common interest developments as both general and litigation counsel. In corporate counsel matters, Cang advises boards in the preparation, interpretation and enforcement of contracts, amending and restating governing documents, insurance coverage issues, rules enforcement, ADA compliance and all other matters affecting associations. In litigation and ADR matters, Cang has obtained hundreds of favorable outcomes for his clients and works with boards to avoid litigation wherever possible.

Education. Cang received two undergraduate degrees from the University of California, Davis–a Bachelor of Arts (BA) in Political Science and a Bachelor of Science (BS) in Managerial Economics. He then earned a Juris Doctorate (JD) from the University of San Diego School of Law where he was awarded a merit grant to continue his legal studies which led to a Master of Laws in Taxation (LLM).

Cang Le is a talented lawyer and solid addition to our team. If your association would like a proposal for legal services, contact us by email or by phone at (800) 464-2817.

FEEDBACK


Lease Addendum #1.
Is it mandatory that the owner/tenant agree to sign the lease addendum? Can it be signed after a tenant has moved into the unit or should it be done before? -Sharon B.

RESPONSE: If your CC&Rs require a signed lease addendum, then yes it’s mandatory. Ideally, you want the addendum signed before the tenant moves into the development. If your CC&Rs have appropriate language, you can require both owner and tenant sign the addendum. How you enforce the requirement will depend on how your development is configured.

Closed Developments. If your development has manned guard gates or a building with a staffed front desk (controlled entry points), the association can prevent a tenant from moving in until the agreement has been signed.

Open Developments. If the development cannot control who moves in, the association has more difficulty enforcing the provision. If not done prior to move-in, the board can levy fines and suspend privileges until the agreement is signed.

Lease Addendum #2. I do not agree with the clause: “(vii) tenant agrees to pay the owner’s assessments should he become delinquent.” It puts the delinquency problem of the landlord onto the innocent tenant. The tenant would be expected pay his/her rent plus the delinquent assessments. -John M.

RESPONSE: The tenant deducts the assessment payments to the association from his rent payments to the landlord.

Lease Addendum #3. I have never seen or heard of this in any California document or newsletter before, but Lordy, it sure would be nice if this were the case. There are many associations just barely able to hold their heads above the water because of delinquent homeowners who rent their units out. -Don C.

RESPONSE: The lease addendum has, thus far, proven effective in the associations where I’ve implemented it. In addition, I’ve successfully tested it in superior court.

Lease Addendum #4
: I don’t mind providing the tenant information sheet to the association but feel that requiring a completed lease is an invasion of privacy! -Laura H.

RESPONSE: The beauty of the lease addendum is that it does not require you to provide your lease to the association. All of your private and proprietary information remains private and proprietary. The  addendum is a separate agreement signed by the owner, tenant and association obligating the tenant to follow the association’s rules and to divert his rent payments to the association in the event the owner becomes delinquent.


Adrian Adams, Esq.
Adams Kessler PLC


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

Delinquent Landlord

QUESTION: Our board is frustrated with delinquent homeowners who collect rent on their units but refuse to pay their dues. Is there anything we can do?

ANSWER: There is a very effective provision I added to CC&Rs 20 years ago to address this issue. It’s called a supplemental lease agreement or lease addendum.

Lease Terms. Whenever an owner leases his unit, both the owner and the tenant are required to sign a lease addendum supplied by the association that requires, among other things, (i) the lease be for the entire unit; (ii) no assignments or subleases are allowed; (iii) the lease is for not less than one year; (iv) tenant agrees to comply with the association’s governing documents and be subject to the its disciplinary procedures; (vi) owner assigns rents from his unit to the association in the event he becomes delinquent; and (vii) tenant agrees to pay the owner’s assessments should he become delinquent.

Effective Tool. The agreement provides a tool that associations need to hold both the homeowner and the tenant accountable since they are parties with the association to the agreement. When I go into court with CC&Rs and a signed agreement, neither the owner nor the tenant have a defense. Normally, a demand letter from my office with the relevant documents enclosed and a threat of litigation is sufficient to get prompt payment of the delinquent assessments. Only once have I had to go into court to enforce the lease addendum.

Rules Enforcement. The addendum is also effective in bringing a wayward tenant into compliance with the rules. Per the signed agreement, the owner and the renter are subject to disciplinary action. Both can be fined and, if necessary, sued. Moreover, the agreement gives the association the power to evict the tenant for violation of the terms of the lease addendum.

RECOMMENDATION: If your association has problems with delinquent landlords and/or problems with rules enforcement involving tenants, a lease addendum may solve both problems. If you have questions about implementing this in your association, contact me.

RICHARD G. WITKIN, ESQ.
JOINS ADAMS KESSLER

I previously announced our new association with Witkin & Neal, Inc. for nonjudicial foreclosures.

I am very pleased to announce that attorney Richard G. Witkin has formally joined Adams Kessler PLC as Of Counsel. Because of his expertise, Richard will be coordinating all assessment collection matters for the firm.

Assessment Collection. Richard Witkin is well-respected in the industry for his extensive knowledge of assessment lien and foreclosure matters. Richard is a member of the United Trustee’s Association and has attained the highest level of expert certification by the UTA and serves as an expert on collection issues in state and federal courts.

Experience. Prior to launching Witkin & Neal, Inc., a premier delinquent assessment lien and foreclosure collection company, Richard gained a wealth of experience as Vice-President and General Counsel of Fidelity Trustee Service, an independent foreclosure trustee. At Fidelity, he supervised thousands of non-judicial foreclosures and conducted hundreds of foreclosure sales. Richard’s expertise includes foreclosure issues involving mixed collateral, multiple collateral and deficiency judgments.

Education. Richard Witkin graduated magna cum laude from Colorado State University and earned his Juris Doctorate from UCLA’s School of Law. He later became a faculty member of the law school from 1980 through 1987.

Articles. Richard has lectured and written extensively on foreclosure issues with articles that include:

• Avoiding Impediments to Real Estate Foreclosures.
• Choosing Between Judicial and Non-Judicial Foreclosure.
• Enforcing Security Interests in Real and Personal Property in Calif.
• Everything You Wanted to Know About Foreclosures.
• Homeowners Association Options at Time of Foreclosure Sale.
• Homeowners Association Options After a Senior Wipe-Out.
• Homeowners Delinquent Assessment Liens and Short Sales.
• Negotiating the Foreclosure Maze.
• Recent Developments in Real Property Foreclosures.

Mr. Witkin is a heavy-hitter and we are pleased to have him in our firm. Contact us for a free analysis of your association’s collection needs.

LIARS, LAWYERS
& LUNACY!

I will be the keynote speaker at Beven & Brock’s 2014 Board Member Seminar. The topic “Liars, Lawyers & Lunacy” will cover rules enforcement and include: 

• Adopting enforceable rules,
• Fine policies that get results,
Keeping boards out of hot water,
How to stop lawyers, and
• Dealing with liars and lunatics.

RSVP. The event will be held Thursday, March 27 from 6:30 to 8:30 p.m. in Pasadena and is open to board members and homeowners alike. Please RSVP to (626) 795-3282 or HOASeminars@bevenandbrock.com for location directions.

FEEDBACK

E-Cigarettes. I’ve read the newsletter for what–eight or nine years? It helped me considerably during the seven years on my own board. It made me sound smart. I read it now for the entertainment value. I can snicker because I’m NOT on the board, but I do go to meetings and serve as inspector of elections, or whatever it’s called, so I am an interested party. I’m no longer a smoker, but by golly, this e-cigarette stuff has got me riled. The direction of this talk goes way beyond my comfort zone when it comes to invading my personal rights zone. Thanks for reading. I’m a fan. -Linda H.


Adrian Adams, Esq.
Adams Kessler PLC


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

E-Cigarettes

QUESTION: My HOA wants to adopt a complete smoking ban–no smoking in the common areas and no smoking inside units. Can we also ban e-cigarettes?

ANSWER: Good question. Electronic cigarettes are battery-powered devices that deliver nicotine in a vapor to the user. According to advocates, they have fewer toxins than regular cigarettes and none of the tar, making them less harmful to users than traditional cigarettes. Moreover, there is no second-hand smoke, no carcinogens in the vapor and no odors; therefore, no problem. Not everyone agrees.

Airlines. The Department of Transportation adopted a policy that passengers cannot smoke e-cigarettes on commercial aircraft. When proposing the ban, the DOT stated:

In light of the unknown health risks with the use of electronic cigarettes by individuals who ‘smoke’ them or the people around them and the growing availability and use of electronic cigarettes, the Department is proposing this amendment … to explicitly ban the use of electronic cigarettes aboard aircraft.

Governments. Two weeks ago, the European Parliament issued strong regulations requiring health warnings on e-cigarettes. Tuesday, the second largest city in the country, Los Angeles, voted to prohibit them in all workplaces as well as parks, city beaches and outdoor dining areas. Contra Costa County, Richmond and Carlsbad have already banned them and other cities around the state are taking steps to either regulate or ban them.

Universities & Businesses. The University of California banned e-cigarettes on all its campuses. It did so because many of the elements in their vapor “are known to cause respiratory distress and disease.” According to the U.S. Food and Drug Administration samples of the nicotine liquid they tested had “detectable levels of known carcinogens and toxic chemicals. The National Business Group on Health issued a “Fact Sheet” on why businesses should consider banning them in the work place.

HOA Common Areas. It is clear from the growing number of regulatory agencies, municipalities and business organizations that associations have sufficient basis to ban e-cigarette use in the common areas. Boards can do so with a simple rule change. The rationale for banning them inside condos, however, is less clear.

Inside Condos. Because condominiums (and most stock cooperatives) have shared walls, ceilings and floors where cigarette smoke can drift into adjoining units, the annoying odors and carcinogens give associations a solid basis for banning smoking inside units, and many already have done so. Banning e-cigarettes, however, may be more difficult to justify since they are not a fire hazard and their vapors might not create detectible odors in adjoining units or cause harm to neighbors.

RECOMMENDATION: If associations decide to completely ban all smoking, including e-cigarettes, they should do so via an amendment to the CC&Rs. If the ban is a recorded restriction, it is presumed reasonable and the burden is on the challenger to prove it is not.

NATIONAL PUBLIC RADIO

I was interviewed this week by Rachael Myrow, host of KQED-FM’s “California Report,” which broadcasts to NPR stations all over the state. The interview dealt with the challenges HOAs face with older residents.

We discussed how members on fixed incomes resist dues increases and special assessments needed for repairing and refurbishing the common areas. The interview also covered health issues, slip and falls, and memory loss problems and how this impacts associations.

Rachael, who has been on an HOA board herself, sympathizes with all sides and is doing an in-depth piece on the challenges “aging in place” creates for older members and their associations. To that end, She would like to interview board members, managers and older residents to get their perspective on this important issue.


If you would like to assist Rachael, please contact Nathalie Ross by e-mail or 800-464-2817.

COACHELLA VALLEY
BUSINESS & EDUCATION EXPO

The Coachella Valley CAI will be holding its 2014 Business and Education Expo on Tuesday, March 25.

The event is free to board members, managers and homeowners and will feature guest speaker Tom Kirk who will talk about the CV Link and how it will impact homeowner associations in Coachella Valley.

The CV Link is a proposed 52-mile trail that will run from Palm Springs to Coachella with a continuous pathway for pedestrians, bicyclists and low-speed electric vehicles.


In addition to valuable information for HOAs, there will be food, wine and drawings for attendees. The program will be held at the Marriott Desert Springs Resort in Palm Desert. RSVP with Tammy at admin@cai-cv.org or (760) 341-0559. Stop by and visit me at our booth! -Adrian

FEEDBACK

No Candidates #1. Having served on an HOA board for five years now, Adrian’s “Recommendation” for obtaining new board members gave me a good belly laugh. -Ken W.

No Candidates #2. Your “apathy” example mirrors two of the HOA boards I am on. Despite having over 100 owners in two complexes, we sometimes have only one owner that shows up for the meetings and virtually no one wants to serve on the boards. What drug do you recommend? -Chuck M.

RESPONSE: I know a manager who makes some wicked moonshine.

No Candidates #3. Interesting as always-especially assessments are paid in full first and then any fees owing. Not sure about drugging potential candidates and dragging them to the annual meeting????? -Jeanne T.

RESPONSE: It’s a tough business we’re in.


Adrian Adams, Esq.
Adams Kessler PLC


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