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New-Newsletter-Template-300x167In case you missed it, Issue # 51 of our ‘Community Association Update’ newsletter is available now!

Topics covered in this issue include:

  • SB 9 Signed! Statewide Re-zoning of Single-Family Neighborhoods & Urban Parcel Splits
  • Removal of Common Area Amenities
  • Recall Petitions
  • Court Confirms not Everyone is Entitled to a Protected View
  • Megan’s Law HOA Disclosures

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

Deer Ridge is an upscale community of single family homes located in San Ramon.  Residents enjoy large lots and views of the San Ramon hills and valley.

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

*New Legislation

hoa-duplex

Senate Bill 9 (SB 9) was recently signed into law making revisions to the California Government Code effective January 1, 2022.  This bill is touted as a major step in California’s efforts to address the housing crisis by re-zoning single family lots to allow for duplexes and more. Below is an overview of some of the primary components of this rather complicated legislation.

Construction of two (2) units on a single parcel zoned as single-family residential

California law will now permit the division, partial or full tear down of an existing single-family home to create two (2) separate residential units, which need not be attached and which are eligible to be sold separately. A municipality will be required to ministerially approve such a project without any significant review or public comment.  Because this law will operate in conjunction with existing law permitting the construction of Accessory Dwelling Units (ADUs), it will allow even more units to be built on the parcel without public review. Local ordinances that would physically preclude construction of the two units cannot be enforced. Any parking requirements to be imposed by local ordinances must be limited to requiring only one “parking space” (not necessarily a garage) per residential unit, and must be eliminated entirely if the project is located within one-half mile of public transit or if there is a car share vehicle located within one block of the project.

Splitting of an existing parcel into two (2) separate parcels

SB 9 also permits urban lot splits in residential zones to create two (2) equal parcels of a minimum of 1,200 square feet. It further prohibits the application of local requirements that would physically preclude the construction of two (2) units to be built on each split lot, subject to other requirements of questionable merit and enforceability (e.g., the ability for a local requirement to be imposed mandating that the owner of the parcel ‘certify’ that they will live in one of the units for at least the first three (3) years after the project’s completion). The parcel split may operate in conjunction with SB 9’s allowance of two (2) separate residential units on a single parcel–allowing for four (4) units to ultimately be constructed on a parcel where only one single-family home may have existed (and even more units if ADUs and JADUs are also constructed on the newly subdivided parcels).

*Impact on HOA CC&R Restrictions is unclear – The common question/concern we are receiving in connection with SB 9 is whether it will override homeowners association (HOA) governing documents that prohibit the type of development projects within HOAs that SB 9 is intended to provide.  For example, it is common for an HOA’s CC&Rs to contain provisions prohibiting homeowners from subdividing their lots.  Unfortunately, SB 9 is silent with respect to this issue and those in the HOA legal community are concerned that SB 9 could be construed as demonstrating public policy in favor of these types of projects.  California courts have held that CC&R restrictions which violate public policy may be challenged and held as enforceable. (See Narstedt v. Lakeside Village Condo. Assn. (1994) 8 Cal. 4th 361).

Senator Toni Atkins, the author of SB 9, submitted a letter to the California Secretary of State ostensibly addressing this concern.  It provides in pertinent part that:

“…on the issue of common interest developments (CID) and homeowners’ associations (HOA). My office has consulted with Legislative Counsel, and SB 9 would not override CID or HOA restrictions. Specifically, SB 9 is silent on the issue, meaning the bill contains no provisions that supersede HOA or CID governing documents. As we have seen with other housing legislation, SB 9 would have to contain an explicit and proactive provision to override those rules. This bill does not.” (Emphasis added.)

While superficially this may seem helpful, it notably fails to state anything regarding the intent of SB 9 and the California Legislature with regard to this issue.  The letter does not have the force of law and whether it will be given weight by California courts in assessing the public policy of SB 9 as it applies to HOAs is anyone’s guess. Moreover, efforts by CAI’s California Legislative Action Committee to request changes to SB 9’s language to explicitly state that it does not override HOA governing documents were ignored.

California HOA lawyers Questions remain as to what, if any, impact SB 9 will have on HOAs and the degree to which homeowners, investors and residential developers will actually find it financially advantageous to pursue multi-unit residential projects within single-family common interest developments. 

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

Heritage Ranch is a planned development located in the foothills of San Jacinto.  Residents enjoy the pool, fitness room, billiard room, and beautiful mountain views.

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

*Asked & Answered

recall-WEBAsked – We recently completed our annual meeting/election where approximately ninety-four percent (94%) of the membership participated. Almost immediately thereafter, we received a petition to recall the Board of Directors (“Board”). Must our association go forward with the recall election? What alternate options are available to the Board?

Answered – Most common interest developments (“CIDs”) are formed as nonprofit mutual benefit corporations. Under California’s nonprofit corporation law, “any or all directors may be removed without cause” (Cal. Corp. Code § 7222 (emphasis added)); meaning that directors can be removed by the membership for any reason, or no reason at all. In order to initiate the recall process, five percent (5%) of the membership may submit a petition to the CID (usually addressed to its president) requesting that a special meeting of the membership be noticed for the purpose of recalling the Board (or any director). The notice requirements are addressed in California Corporations Code section 7511(c).

Recall elections can disrupt the effective operation of the CID and are often a costly endeavor. And, in most cases, such efforts fail to achieve the petitioning members’ desired objective—the removal of the Board. This is especially true in situations where the CID’s Bylaws allow for cumulative voting and members try to recall individual directors. (See Removal & Recall of Directors – Individual Director or Directors.) Nevertheless, under most circumstances, the CID must take action in response to a petition to recall the Board. However, based on the facts contained in the question presented, there may be other options available. The three options available in response to a valid recall petition are:

  1. Perform only those acts required to conduct a recall election;
  2. Do nothing in response to the petition other than to inform the petitioners that the Board has elected not to take action; or
  3. Perform all acts necessary to hold a recall election and concurrent director election.

Each option will be discussed in turn.

Option #1 – Perform only those acts required to conduct a recall election.

According to the facts provided in this question, the petitioning members have submitted a petition to recall the Board. The petitioning members have not also requested that a director election be held in the event the recall is successful. Thus, the Board could simply notice a special meeting of the membership to recall the Board without soliciting membership votes on replacement directors. This approach is problematic for the CID.

Under California Corporations Code section 7220(b), a director continues to serve until their successor is elected, “unless the director has been removed from office.” Thus, if the recall is successful, all directors immediately cease being on the Board; in other words, the CID will be without a Board. Failure to have a Board violates California Corporations Code section 7210, which states that “[e]ach corporation shall have a board of directors.” (Emphasis added.) Moreover, without a Board, the CID will be significantly prejudiced; it will not be able to carry out its obligations under California law and its governing documents (e.g., maintenance may cease, rule enforcement ends, the CID will be unable to respond to lawsuits, etc.).

Since the CID will be without a Board, members will be forced to file a petition with the Superior Court for the appointment of a receiver pursuant to California Code of Civil Procedure section 564(a)(9). The receiver will then manage the affairs of the CID and will initiate the procedure to conduct a director election. This, of course, is problematic in several respects.  First, receivers are paid for their services. Most CIDs do not have adequate financial resources to cover unanticipated expenses. The receiver therefore may be forced (and will have the authority) to levy an emergency special assessment. Second, the receiver’s objectives are not usually in line with the interests of the CID’s members.

In light of the foregoing concerns, it would not be in the CID’s best interest to proceed in this fashion (i.e., conduct the recall election without a concurrent director election).

Option #2 – Do nothing in response to the petition other than to inform the petitioners that the Board has elected not to take action

Based on the information given, this option may be reasonable under the circumstances, especially given the overwhelming voter turnout (approximately ninety-four percent (94%) of the membership participated in the election). If such option is selected, the petitioning members will have the option of giving notice of the special meeting pursuant to California Corporations Code section 7511(c), or may petition the Court to require that such notice be given by the CID. Either way, the petitioners will be required to obtain a Court order directing the CID to prepare and distribute ballots as the petitioners do not have such authority. (See Cal. Civ. Code § 5115 (“Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member….”).)

This option, while seemingly reasonable, raises similar concerns referenced above. To the extent members petition the court for an order compelling the CID to take action in response to the petition (including providing notice and preparing/distributing balloting materials), the CID will incur significant legal fees in defense of its position in this matter (unless insurance-appointed defense counsel steps in to provide a defense). And, in the event the petitioners are successful, the CID will incur costs relative to holding the recall election/director election. Again, most CIDs are not in a financial position to incur these additional costs.

Option #3 – Perform all acts necessary to hold a recall election and concurrent director election.

The third, and final, option—to conduct the recall election and concurrent director election—is the only option available to the CID that minimizes the CID’s financial harm and liability exposure. It is therefore the preferred course of action in response to a petition to recall the Board.

It is important to note that recent changes to the California Civil Code governing CID elections has made it practically impossible for a CID to comply with the timing requirements contained in California Corporations Code section 7511(c) and those contained in California Civil Code section 5115. Nevertheless, California Civil Code section 5100(a)(1) makes it clear that the procedural requirements contained within the Davis-Stirling Common Interest Development Act (“Act”) control—“Notwithstanding any other law….” The CID must therefore comply with the procedural requirements contained in California Civil Code section 5115 notwithstanding the degree to which same deviates from those contained in California Corporations Code section 7511.

Other Option Available to the CID to Prevent Recall Petitions Immediately After a Director Election

The foregoing has addressed the ways in which a CID may respond to a recall petition immediately after the conclusion of a director election. It does not, however, address how a CID may prevent such petitions from being brought in the future. One way in which a CID may prevent such petitions from being brought in the future is to adopt rules governing recall elections. Although the Act does not directly address the extent to which a CID may restrict recall petitions, other bodies of law have. For example, in the California Elections Code, a person is precluded from bringing a recall petition against “an officer of a city, county, special district, school district, community college district, or county board of education” if one ore more of the specifically identified limitations apply (e.g., the officer “has not held office during [their] current term for more than 90 days”). A CID may adopt a similar limitation for director recalls.

California HOA lawyers Each recall petition is unique. Thus, while the foregoing provides general guidance based on the particular facts identified above, each CID must confer with its attorney to determine the appropriate response to a recall petition.

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

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

Laguna Audubon Vistas is a condominium community located in the coastal city of Aliso Viejo. Residents enjoy stunning views from the pool, spa, fitness center and clubhouse.

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

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

Serrano at Glenrose Ranch is a residential neighborhood in the city of Highland. This community enjoys nearby amenities and schools, well landscaped communal areas, and beautiful views of the San Bernardino and San Gabriel Mountains.

hoa law firm Our HOA lawyers and staff look forward to working with Serrano at Glenrose Ranch’s Board and management.

*Asked & Answered

imageAsked Many owners in the community have requested that the board of directors consider removing an old, largely unused tennis court. We have three other tennis courts in the community and the space could be repurposed for a variety of other uses. Does the board have the authority to remove the tennis court?

Answered – Generally, not without membership approval. The membership pays dues for the maintenance, repair, and use of common area amenities. Many owners make their purchasing decisions in reliance on the available facilities a community has to offer. If the board unilaterally begins removing amenities without membership approval, there could be a risk of exposure to potential legal action. In addition, some associations have specific provisions in their governing documents that prohibit the elimination of common area amenities without membership approval.

That said, there can be limited situations where a board may have the authority to remove a common area amenity without a vote of the membership. Such situations may turn in part on the size of the amenity, whether it poses a hazard to the residents, and if the governing documents authorize such an action. However, disrepair alone generally cannot be the sole basis of a removal decision as the association usually has a duty to maintain common area amenities in good repair.

California HOA lawyers We recommend that associations and their boards proceed with caution when evaluating whether to remove a common area amenity. Counsel should be consulted to review the association’s governing documents to advise whether any specific provisions limit or restrict the board’s authority or require a vote of the membership for such actions.

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

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

Lazycreek is a community of custom single family homes located in one of the most sought after equestrian neighborhoods in the heart of Orange Park Acres. Residents enjoy the horse-driven community with 20 miles of horse trails, large lots, and close proximity to parks and open spaces.

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

Brookview-300x169It’s our privilege to welcome Brookview Condominiums Owners’ Association to Tinnelly Law Group’s growing family of HOA clients.

Brookview is a contemporary condominium community located in the southern region of Costa Mesa. Residents enjoy the pool, spa, and tennis courts.

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