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Westpark-Tiempo-300x169It’s our privilege to welcome Westpark Tiempo Community Association to Tinnelly Law Group’s growing family of HOA clients.

Westpark Tiempo is a Spanish inspired condominium community located in the Westpark region of Irvine. Residents enjoy a community pool, spa, tennis court and greenbelt views.

hoa law firm Our HOA lawyers and staff look forward to working with Westpark Tiempo’s Board and management.

unnamedHomeowners Associations (“HOA”) are encouraged to report potential and actual claims to their insurance carriers.  In fact, there is usually a provision within the HOA’s Declaration of Covenants, Conditions, and Restrictions (“CC&Rs”) that delineate the circumstances when an HOA’s manager should report a claim.  If there isn’t such a provision, HOAs should adopt standard protocols regarding reporting a claim with its insurance carrier in situations where there may be coverage while also immediately taking action to mitigate any damages internally.

In most instances after a claim is reported to the HOA’s insurance carrier, an adjuster would be assigned.  If the situation may be resolved with only the insurance adjuster, the HOA’s general counsel, the Board of Directors (“Board”), and HOA’s manager involved, then great.  Oftentimes though, the insurance adjuster will assign insurance defense counsel as the claim might be a bit more complicated.  In most cases, insurance assigned defense counsel will take over the matter and be the point of contact between the HOA and the insurance adjuster.  HOAs will usually opt to not have their general counsel remain on the case as the HOA’s insurance carrier only covers insurance defense counsel’s attorney’s fees not the HOA’s general counsel fees.  While that is understandable, we would urge Boards to reconsider taking the HOA’s general counsel completely off an insurance handled matter simply to conserve costs.  In the long run, such a decision might end up causing greater liability and headaches for the HOA.

To provide a bit of background, attorneys in California are required to follow what is known as the California Rules of Professional Conduct (“Rules”).  As a matter of fact, these Rules are so important that they are tested on the California State Bar and attorneys are required to complete continuing education courses pertaining to ethics every few years.  These Rules serve to protect the public, the courts, and the legal profession.  Thanks to cinematic arts and social media platforms, attorneys are already viewed as “sharks,” so these Rules promote the administration of justice and confidence in the legal profession.  An attorney’s failure to comply with an obligation or prohibition imposed by a rule is a basis for invoking the California State Bar’s disciplinary process.  It is important for HOAs and their Boards to know and understand the foundation of a good attorney-client relationship and why an HOA’s general counsel will usually be more invested than an HOA’s insurance defense counsel.

When a Board decides to forego having their general counsel involved in an insurance matter until resolution is achieved, the HOA might be resolving the claim in such a way that is not in the best interests of the HOA.  For example, if insurance defense counsel fails to keep communications lines open between insurance defense counsel and the Board as required by Rule 1.4, when it becomes time to settle, the Board does not fully understand what they are agreeing to settle.  Most insurance defense counsels work in some capacity for the HOA’s insurance carrier therefore, even though they have an attorney-client relationship with the HOA and should advocate zealously on the HOA’s behalf, the reality is the HOA’s insurance carriers are their bosses.  As such, there is a slight conflict of interest.  If the HOA’s general counsel is not involved in mediation, settlement negotiations, or preparation of the settlement agreement, the HOA’s Board might end up agreeing to something detrimental to the HOA.  At that point, damage control would necessitate a malpractice lawsuit concerning insurance defense counsel and a bad faith insurance lawsuit—neither of which any Board wants a part of.

California HOA lawyers To avoid such an outcome, HOA Boards should at least retain their general counsel on major decisions throughout the duration of the insurance claim.  If the Board does not want HOA general counsel to be directly involved, then the Board should routinely update their general counsel to obtain appropriate advice and risk mitigation strategies.

-Blog post authored by TLG Attorney, Vivian X. Tran, Esq.

California-Court-300x169It’s our privilege to welcome California Court Community Association to Tinnelly Law Group’s growing family of HOA clients.

California Court is a Mediterranean-themed condominium community located in north Mission Viejo. Residents enjoy a community pool, spa, and barbecue stations.

hoa law firm Our HOA lawyers and staff look forward to working with California Court’s Board and management.

Cottages-on-4th-300x169It’s our privilege to welcome The Cottages on 4th Community Owners Association to Tinnelly Law Group’s growing family of HOA clients.

Located in the City of Ontario, The Cottages on 4th is a newly constructed, residential single family home community by KB Homes. Residents enjoy a community park, pool, and spa.

hoa law firm Our HOA lawyers and staff look forward to working with Cottages on 4th’s Board and management.

*Asked & Answered

software-contract-negotiationsAsked Our Board of Directors has been seeking to switch out a vendor for some time, but we have been waiting for the current contract to expire. It has become known that the current vendor contract automatically “renewed” for another 5-year period because we did not provide notice of our intent to terminate at least 90 days before the contract expired. This termination notice period was required under the terms of the agreement, but we were unaware of it until it was too late. Is there anything we can do to get out from under this contract?

AnsweredUnfortunately, certain service agreements (such as waste disposal agreements, among others) may contain provisions whereby the contract continues in perpetuity, even after the expiration of the initial term, unless affirmative cancellation notice is provided to the vendor. These contracts are usually referred to as “evergreen” contracts because they automatically renew unless otherwise cancelled by the association within a specified period. Each situation is unique so counsel should be consulted to review the contract to determine if there is a legal basis for termination.

California HOA lawyers However, prevention is the best remedy so all significant vendor contracts should be reviewed by counsel, prior to execution, to remove or negotiate burdensome provisions such as “evergreen” clauses. This can save significant time and expense in the future. In addition, associations should calendar all termination requirements and notice periods contained in their agreements so that they do not lapse.

-Blog post authored by TLG Attorney, Tim D. Klubnikin, Esq.

Newfield-300x169It’s our privilege to welcome Newfield Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Located in the City of Gardena, Newfield is a newly constructed, luxury condominium community by KB Homes. Residents enjoy a tot lot and close proximity to beach cities and the South Bay Galleria.

hoa law firm Our HOA lawyers and staff look forward to working with Newfield’s Board and management.

Country-Villas-300x169It’s our privilege to welcome Country Villas Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Country Villas is condominium community located in the City of Fullerton. Residents enjoy a pool, spa, tennis courts, and breathtaking views.

hoa law firm Our HOA lawyers and staff look forward to working with Country Villas’ Board and management.

restrain-of-trade-ball-and-chain*Asked and Answered

AskedAn employee (“Employee”) of one of our vendor’s (“Vendor”) has left the company and is now employed by a competing firm (“Competitor”). We want to terminate our contract with Vendor and switch to Competitor so that we can continue to use Employee. Vendor’s contract has a non-compete clause stating that we cannot “directly or indirectly” hire any of Vendor’s employees for twelve (12) months after contract termination. Is such a provision enforceable?

Answered Non-compete clauses are very common, especially in routine service vendor contracts (e.g., building maintenance, management companies, etc.). They are meant to prevent clients from leaving when the employee leaves; after all, the relationship is with the employee, not the employer. Fortunately, such non-compete clauses are generally unenforceable in California.

California law demonstrates a strong aversion to contract provisions that place a restraint on profession, trade, or business. Indeed, unless the covenant falls within one of the expressly defined exceptions, it is void and unenforceable. (See Cal. Bus. & Prof. Code § 16600 (“Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.”).) The type of provision referenced in the question does not fall into one of the exceptions identified in the California Business and Professions Code.

Moreover, such a provision has been rendered void as an impermissible restraint on trade under California case law. For example, in VL Systems, Inc. v. Unisen, Inc., the Court held that a very broad no-hire provision of a contract between consulting company and client, under which client could not hire any of consulting company’s employees for twelve (12) months after the contract terminated, was unenforceable, in violation of the statute prohibiting restraints on engaging in a lawful, profession, trade, or business of any kind. (2007) 152 Cal. App. 4th 708. Like in VL Systems, Inc., the no-hire provision in the Vendor’s contract prevents the association from hiring any of Vendor’s employees for twelve months after the contract terminated. Thus, although not a true “covenant not to compete,” the “effect of the no-hire provision is to restrict the employment of [Vendor’s] employees; it is inconsequential whether the restriction is termed a ‘no-hire’ provision between [Vendor] and [the association] or a ‘covenant not to compete’ between [Vendor] and its employees.” (Id. at pp. 716-17.)

California HOA lawyers Although the non-compete provision is invalid, it does not mean that Vendor will not bring a lawsuit against the association for breach of contract. Indeed, Vendor may very well bring a lawsuit against the association, which will necessarily result in the parties incurring legal expenses relative thereto. The association therefore must remain mindful of this fact and be prepared to defend itself should a lawsuit ensue.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.

Huntington-Pier-Colony-300x169It’s our privilege to welcome Huntington Pier Colony Condominium Homeowners’ Association to Tinnelly Law Group’s growing family of HOA clients.

Huntington Pier Colony is a resort style community of condominium homes in downtown Huntington Beach located within easy walking distance to a wide variety of shops, boutiques, museums, restaurants and entertainment. Residents enjoy an attractive salt water pool and spa; a clubhouse with a full kitchen, workout center and lounge area overlooking the ocean.

hoa law firm Our HOA lawyers and staff look forward to working with Huntington Pier Colony’s Board and management.

New-Newsletter-Template-300x167In case you missed it, Issue # 55 of our ‘Community Association Update’ newsletter is available now!

Topics covered in this issue include:

  • Combatting Unlawful Harassment with Restraining Orders
  • What the Cluck? Addressing Backyard Chickens in HOA’s
  • The Impact of a Homeowner Filing Bankruptcy and Receiving a Discharge on Assessment Collection
  • How to Determine Whether Compliance Fines are Reasonable

A link to the newsletter is here.

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