Posts for : December 2013

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HOAs, if You Give Only ONE Side of an Election Issue the Opportunity to Advocate on Its Behalf, the Court May Overturn Your Election!

By Jeff Cluett, Esq., Law Offices of Ann Rankin

 

         On June 26, 2013, the California Court of Appeal, in Wittenberg v. Beachwalk Homeowners Association, held that homeowners’ association boards are subject to Civil Code Section 1363.03 – and that failure to comply could cause a court to overturn an election!
What is Section 1363.03?Section 1363.03 states, in part:

(a) An association shall adopt rules, in accordance with the procedures prescribed by Article 4 (commencing with Section 1357.100) of Chapter 2, that do all of the following:

(1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content.

(2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election.

            In Beachwalk, the board held three elections to amend the CC&Rs.  The board sent two letters to association members stating that the amendment was “more flexible and reasonable, while still ‘a workable method of fiscal restraint.’”  They also warned that if it did not pass, the association would become embroiled in expensive litigation.  They urged the members to vote for the amendment.  The Association’s website also encouraged its members to vote for the amendment.  A one-page attachment to the letters stated a “Case for amending the CC & Rs” but failed to include opposing material.  An association newsletter also stated that the proposed amendment was more modern and adaptable and failure to pass it would encourage litigation, concluding:  “Vote YES on the proposed 8th amendment to our CCRS so we can put our money to use on physically improving Beachwalk.”The board refused a request to respond to the newsletter and a request to rent the association’s clubhouse for a meeting for candidates who did not support the amendment.  It also refused the request of another homeowner opposed to the amendments to use a common area for a political rally.  Finally, while the newsletter was posted on a glass-enclosed community bulletin board, nonboard members were not permitted to post materials.  Further, nonboard members were not allowed to post material on the Association’s website.The members passed a modified amendment at a third election.  Members opposed to the amendment sued.  The court of appeal held that the board violated Section 1363.03(a)(2).  Why?First, the court held that the board is subject to Section 1363.03(a)’s equal access provision.  Therefore “[t]he equal-access provision of subdivision (a)(1) is triggered any time a ‘member’ advocates a point of view using association media.”  The California Legislature wanted to ensure that opposing voices were heard.  Therefore a board must either give equal access to opposing viewpoints or forego the use of association media.

Second, by advocating its viewpoint and failing to allow opposing viewpoints, the board violated Section 1363.03(a)(2).  The board advocated for the amendment by letters, attachments to letters, website, newsletter, and bulletin board.  Yet it refused to allow opponents to use media such as the clubhouse and the common area to voice their opposition.  The board therefore violated Section 1363.03.

Oddly, despite these findings, the court did not overturn the third election.  Rather, it returned the case to the trial court to determine whether the violations of 1363.03(a)(2) should be considered in deciding whether to void the third election.

Why should you care?  Because elections are time-consuming, expensive, and contentious!  You do not want your election results overturned.  So what do you do?

First, if the board wants to advocate for the passage or defeat of an amendment, it must allow its opponents access to the same media – common areas, websites, newsletters, etc.

Second, if anyone wants to use association resources to advocate their position, the board must decide whether to let them.  If the board decides not to, then it does not need to allow the other side to do so.  However, if it does allow such access, then the board must allow the other side access as well.  If it does not, then it risks having its election results overturned.

 

This article is general in nature. It is not a substitute for qualified legal advice. Contact an attorney with expertise in common interest development law if you require specific legal advice.
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Rescuing Your Board Members from E-Mail Hell!

By Ann Rankin, Esq. at the Law Offices of Ann Rankin

 

“I’m in trouble at work! The Board business is taking up all my time! The homeowners send me emails 24/7 and they all want an immediate reply!”

“Answering homeowner emails is a constant task, and none of the owners are ever satisfied with my responses!”

If you’re a board member of a common interest development association, the above complaints may sound all too familiar.

What is wrong with this picture and what can you do about it?

Problems with Board E-Mail Communications with Members: 

Here’s a list of legal and practical problems with Board Member replies to E-Mail communications with homeowners:

  1. If the Board Members make a practice of replying to e-mail communications from Members, they will soon be inundated and will have difficulty prioritizing tasks or getting anything else done. Board Members are volunteers; most of them didn’t sign up to be on duty 24 hours a day, 7 days a week when they ran for office. As soon as the other homeowners find out how time-consuming the Board’s job has become, on account of the proliferation of e-mails and demands to reply to them immediately, no one else will want to run for the Board, except perhaps for a few masochists.

2. Replying to e-mails may create a situation in which a particular Board Member is making a unilateral decision without Board deliberation, voting, or appropriate minutes. This circumvents the Board process. Such decisions may not have the support of other Board Members, and may sometimes be ill-considered, but they may bind the Association if the board member had apparent authority to make the decision.

3. When Board Members make decisions by e-mails, rather than in open board meetings, it circumvents the intent of the Open Meeting Act, Civil Code 1363.05, which requires the Board to circulate an agenda prior to each open Board Meeting; to allow association members to attend the open board meetings, and to allow members to address the Board on matters of association business. If everything is done behind the scenes via email, the Members are deprived of their rights under the Open Meeting Act.

4. The practice of the Board immediately replying to e-mails from members creates unrealistic and never-ending expectations from members. Can you imagine Board Members of publicly-traded corporations spending hours a day replying to e-mails from shareholders? Neither can I.

What Can Board Members Do to Get Out of E-Mail Hell?

I have advised some Associations whose Board Members were roasting in E-Mail Hell to adopt an Operating Rule to solve the problem. Such a Rule does not fall within the parameters of those that must be circulated among the Members under Civil Code 1357.100 et. seq. An example of the proposed Rule follows. If you’re in E-Mail Hell, I recommend you try it. This proposed Rule assumes that you have a property manager. If you’re self-managed, you can still adopt the Rule but you’ll have to require that the Members send their emails to one or more Board Members who will periodically collect, organize and prioritize them and put them on the agenda for the next Board Meeting if appropriate.

SNAKE PIT HOA RULE REGARDING COMMUNICATIONS WITH THE BOARD OF DIRECTORS

The Board of Directors of Snake Pit Homeowners’ Association hereby adopts the following Rules pursuant to the Association’s Declaration of Covenants, Conditions and Restrictions, as follows:

1. Findings.

a. The Board of Directors consists of unpaid volunteers who donate their time to the Association.

b. The Board of Directors is required by law to create an agenda for each Board Meeting, to follow the agenda, and to make decisions only at Board Meetings and only after giving all Board Members the chance to deliberate, undertake necessary study and other due diligence, and make a reasoned decision.

c. The Board of Directors members, as fiduciaries, need to prioritize their time at Board Meetings in order to be sure to attend to the most important issues at hand.

d. The Open Meeting Act, Civil Code 1363.05, requires that Board decisions be made at open meetings, except for issues that are allowed by statute to be discussed in executive sessions. All Association Members are required to be provided with an agenda of each open Board Meeting and are required to be able to listen to Board deliberations, and to provide input to the Board during the Open Forum time.

e. A number of Association Members are in the habit of sending e-mails directly to Board Members’ personal e-mail accounts, in between Board Meetings, and requesting the Board Members provide an immediate response. If the Board Members were to do so, it would preclude their being able to deliberate upon the issues at hand in an open Board Meeting. Also, if the Board Members replied to e-mails between meetings, this would deprive the other Members of the opportunity to listen to Board deliberations on the issue at hand and to provide input during the Open Forum time. Further, this practice could preclude Board Members from prioritizing their time as they are required to do as fiduciaries.

f. The Association employs a managing agent whose job it is to work with the Board to prepare agendas, to carry out Board directives, and to provide the Board with correspondence and with other materials requiring matters that may require attention of the Board and Board decisions.

g. Counsel for the Association has pointed out that the Association is a corporation, and that it is not usual for corporate board members to be expected to reply to e-mails from their constituents outside of Board Meetings; also that making decisions outside of regular or special Board Meetings may violate the Open Meeting Act.

h. The Board wishes to adopt a procedure that will enable the Board Members to prepare appropriate agendas for Board Meetings with the assistance of the manager; that will allow the Board Members to discuss all Board business except for those subjects that may be decided upon in executive session at open board meetings, and that will allow Board Members to appropriately prioritize their time.

NOW THEREFORE, the Board enacts the following Operating Rule:

a. All Member communications requesting Board action or response are to be directed, in writing, to the property manager. The property manager will periodically notify the Board Members of the issues, and will assist them by organizing the communications and preparing an appropriate agenda for each Board Meeting.

b. Board Members will no longer reply to e-mails between Board Meetings, and may block e-mails sent by Members who attempt to communicate with them directly;

c. All Board decisions will be made at Regular or Special Board Meetings. The meetings will be conducted as required by the Open Meeting Act. All Board Resolutions will be voted on by the Board Members, constituting at least a Quorum, sitting at Regular or Special Board Meetings. The following matters may be discussed by the Board in Executive Session: Litigation, formation of contracts with third parties, personnel issues, member discipline, and member requests for payment plans for delinquent assessments.

 

This article is general in nature. It is not a substitute for qualified legal advice. Contact an attorney with expertise in common interest development law if you require specific legal advice.
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2013 STATUTES RELATED TO COMMON INTEREST DEVELOPMENTS

By Ann Rankin, Esq. at the Law Offices of Ann Rankin

This article summarizes new homeowner association statutes affecting you and which take effect on January 1, 2013, unless otherwise specified below.

1.  Davis-Stirling Restatement (AB 805, 806).  These bills would repeal California Civil Code Sections 1350-1378 of the Davis-Stirling Common Interest Development Act (“Act”) and would restate them in new California Civil Code Sections 4000-6150.  The law takes effect on January 1, 2013, but does not become operative (enforceable) until January 1, 2014, which gives managers, boards and attorneys one year to familiarize themselves with the reorganized Act.  AB 805 would revise and recast provisions regarding notice and delivery, standardize terminology, establish guidelines on the relative authority of governing documents, and establish a single procedure for amendment of the declaration.  The bill would establish an express list of conflicts of interest that may disqualify members of a board of directors from voting on certain matters.  The bill would also, among other things, revise provisions related to elections and voting, establish standards for the retention of records, and broaden the requirement that liens recorded by the association in error be released.  AB 806 updates the many references to the Act in other parts of  California statutes to reflect the new correct statute numbers.  The new law does not require that associations avoid amending their governing documents until January 2014, and specifically provides for associations to update their existing governing documents (CC&Rs and Bylaws) by a board vote in order to correct the old Civil Code references and insert the new ones.  Management firms would be well-advised to learn the new disclosure format of the “Annual Budget Report” (in future Civil Code Section 5300) and the “Annual Policy Statement” (in future Civil Code Section 5310) and begin using that format sooner, to insure full compliance with the new law.

 2.  Open Meeting Act and Rental Restrictions (AB 2697).  This bill amends the Open Meeting Act so that the board of directors only needs unanimous consent on substantive decisions made by email during an emergency situation and the Association’s representative instead of a board member needs to be physically present during the board’s teleconference meeting. This bill also removes the requirement that a seller’s disclosure describe how and to whom a rental restriction would apply.

 3.  Association Records (AB 1838).  This bill would prohibit a cancellation fee for copying association records if the cancellation was requested in writing by the same person who placed the order and if work on the order had not yet been performed or if the work had been Paid for. The bill would require the association to refund all fees for the association records if the request was canceled in writing and work on the order had not yet been performed. Additionally, if the request was canceled in writing, the bill would require the association to refund the share of fees collected for the association documents that represents the portion of the work not performed on the order. The bill would also require that the form be written in at least 10-point type.

 4.  Notice to Association After Foreclosure (AB 2273).  This bill would add California Civil Code Section 2924.1 to require the foreclosing party to record a sale within 30 days of the sale.  The recorded sale would provide the associations with public notice as to who now owns the property and where they may be contacted for assessments due.  In addition, AB 2273 shortens the time for foreclosing parties to notify associations that they are the new owners.  However, in order to take advantage of this aspect of the new law, associations must record a “Request for Notification” prior to the property receiving a notice of default.  Where an association has recorded a “Request for Notification,” the foreclosing party must notify the association within 15 days after the date of sale.  This will greatly help to ensure that associations receive notice of foreclosure, and the identity of the new owner, as soon as possible so that assessments can be charged to the proper party.

 5.  Electric Vehicle Charging Stations (SB 880).  This bill cleans up SB 209, which was adopted in 2011, to strengthen the association’s authority to regulate the installation of electric vehicle charging stations within the common areas and associated costs.  This bill took effect on February 29, 2012.

 6.  Deficiency Judgments (SB 1069).  This bill amends California Code of Civil Procedure Section 580b to provide that no deficiency judgment shall lie on any loan, refinance, or other credit transaction that is used to refinance a purchase money loan or subsequent refinances of a purchase money loan, except to the extent that the lender or creditor advances new principal which is not applied to any obligation owed or to be owed under the purchase money loan, or to fees, costs, or related expenses of the refinance. The bill would provide that any payment of principal for a refinanced purchase money loan would be deemed to be applied first to the principal balance of the purchase money loan and then to the remaining principal balance. The bill’s provisions would apply to a loan, refinance, or other credit transaction used to refinance a purchase money loan which is executed on or after January 1, 2013.

 7.  Disclosure of Notice of Default (SB 1191).  This bill would require every landlord who offers for rent a single family dwelling, or a multifamily dwelling not exceeding 4 units, and who has received a notice of default that has not been rescinded with respect to a mortgage or deed of trust secured by that property to disclose the notice of default in writing to any prospective tenant prior to executing a lease agreement for the property. The bill would provide that a violation of those provisions would allow the tenant to void the lease and entitle the tenant to recovery of twice the monthly rent or twice the amount of actual damages from the landlord, and all prepaid rent, if the tenant voids the lease and vacates the property in addition to any other remedies that are available. The bill would also provide that if the tenant elects not to void the lease and the foreclosure sale has not yet occurred, the tenant may deduct a total amount equal to 2 months’ rent from future rent obligations owed the landlord who received the notice of default. The bill would specify the content of the written disclosure notice and would require the notice to be provided in English and other languages, as specified. The bill would exempt a property manager from liability for failing to provide the written disclosure notice unless the landlord notified the property manager of the notice of default and directed him or her in writing to deliver the written disclosure.

 8.  Service of Process; Private Investigator (AB 1720).  This bill amends California Code of Civil Procedure Section 415.21 to require a person to be granted access to a gated community for service of process upon displaying evidence of licensure as a private investigator.  This bill would state that it is not the intent of the Legislature in enacting this act to abrogate or modify the holding of the court in Bein v. Brechtel-Jochim Group, Inc. (1992) 6 Cal.App.4th 1387, relating to service upon a guard in a gated community.

 9.  Swimming Pool Safety (AB 2114).  This bill would require a new, public swimming pool, spa, or public wading pool to have at least 2 circulation suction outlets per pump and be separated by a distance of at least 3 feet in any dimension between the suction outlets, or be designed to use alternatives to suction outlets, including, but not limited to, skimmers or perimeter overflow systems to conduct water to the recirculation pump. The bill would also require the circulation system to have the capacity to provide a complete turnover of pool water.  This bill defines a “public swimming pool” as a swimming pool operated for the use of the general public with or without charge, or for the use of the members and guests of a private club. Public swimming pool does not include a swimming pool located on the grounds of a private single-family home.

I hope that this information is helpful.   Please be advised that this letter is intended as an update on pertinent  California law and is not intended as legal advice. Should you have any questions or concerns regarding specific matters, please call me at  510-653-8886.

 

This article is general in nature. It is not a substitute for qualified legal advice. Contact an attorney with expertise in common interest development law if you require specific legal advice.