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Articles Posted in Assessments

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*New Case Lawhoa foreclosure

The California Civil Code requires community associations (“HOAs”) to levy regular and special assessments as necessary to perform the HOA’s obligations under its governing documents. However, when a homeowner fails to pay those assessments, HOAs are often left with no alternative other than to pursue the owner in accordance with the collection methods sanctioned under the HOA’s governing documents and the Civil Code. Because those methods could result in the foreclosure of the delinquent homeowner’s property, it is paramount that HOAs strictly comply with the statutory procedures and requirements applicable to assessment collection (i.e., transmittal of notices, dispute resolution procedures, votes to initiate foreclosure, etc.).

The recent case of Diamond v. Casa Del Valle Homeowners Association 2013 DJDAR 9176, which has been certified for publication, illustrates how failing to comply with those procedures and requirements can result not only in the invalidation of a HOA’s assessment lien, but also an award of attorney’s fees and costs to the delinquent homeowner…

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piggy bank reserve studies hoa reserve accounts.png*New Library Article

“Always be prepared.” That simple phrase sums up the importance of funding and properly maintaining a reserve account. Accidents and surprise maintenance issues will inevitably pop up. When they do, the HOA that has been properly funding and managing its reserve account will be prepared to do what is necessary to protect the interests of the HOA and its members.

Our HOA lawyers have published a new article entitled “Association Reserve Accounts and Reserve Studies.” It covers the basics of reserve accounts and reserve studies, their importance, and the relevant obligations of a HOA and its Board. The article is available for download from our library.

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*Asked & Answeredhoa_budget_attorney_financial_association.jpg

Asked: Are there any negative consequences or liability that can result from our Board’s failure to distribute the HOA’s annual budget?

Answered: Yes. California Civil Code Section 1365 requires a homeowners association (“HOA”) board of directors to prepare and distribute an annual pro forma operating budget to the HOA’s membership. Failure to comply with this requirement may hinder the board’s ability to take certain actions, such as increasing assessments or levying special assessments.

Under California Civil Code Section 1366, a HOA may increase annual assessments by twenty percent (20%), and impose special assessments of up to five percent (5%) of budgeted gross expenses, without the need to obtain membership approval. However, this power may only be exercised by the board if the annual budget required by Section 1365 has been distributed to the membership thirty (30) to ninety (90) days before the start of the fiscal year. Accordingly, where a HOA fails to comply with its financial disclosure obligations, regular assessment increases and special assessments will need to be submitted to the membership for approval. This will require the HOA to conduct a costly and potentially ineffective election and, should the membership fail to approve the assessment increase, the HOA may be forced to delay desperately needed repairs or forego other necessary services when needed.

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The Civil Code’s various disclosure requirements can be difficult for any volunteer board to fully understand and satisfy. It is therefore important for HOAs to utilize the services of competent industry professionals, managers and financial planners to ensure that the interests of the HOA and the membership are not jeopardized as a result of statutory noncompliance.

Content provided by TLG attorney Kai MacDonald.

To submit questions to the HOA attorneys at Tinnelly Law Group, click here.

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hoa lawsOur annual “Legislative & Case Law Update” newsletter for the year 2013 is now available in our library!

The Legislative & Case Law Update provides an overview of the new legislation and case law impacting California Homeowners Associations (“HOAs”) as we head into 2013. The new legislation includes, among other items, bills that impact Bank foreclosures, the re-organization of the Davis-Stirling Act, EV Charging Stations and fees charged by HOAs in producing certain records. The new case law includes rulings that may impact the architectural restrictions placed on the installation of solar panels, arbitration provisions for construction defect disputes, “no-cost” HOA collections contracts, election disputes and defamation claims. The Legislative & Case Law Update also addresses some new Fannie Mae and FHA regulations impacting condominium insurance and certification requirements.

Click here to read our Legislative & Case Law Update (2013)

Have questions on any of the new legislation or case law? Click here to send us a question online.

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hoa law firm*New Library Article

AB 805, effective January 1, 2014, will make existing California law pertaining to Homeowners Associations (“HOAs”) more logical and user-friendly. The bill’s primary effect is (1) to renumber and reorganize the Davis-Stirling Common Interest Development Act (“the Act”), and (2) to make various minor changes to the substantive content the Act. Other than renumbering of the Act from Sections 1350-1378 of the Civil Code to Sections 4000-6150, the bill reorganizes the Act in a more logical manner. It also standardizes terminology, eliminates outdated references to other authorities, groups provisions pertaining to the same subject matter, and reorganizes longer sections into more convenient subparts. While most of the Act’s content will remain the same, this blog post provides an overview of what substantive changes will go into effect as of January 1, 2014.

Our HOA lawyers have also published this information in our new library article entitled “The Basics of AB 805,” available for download from our library.

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*New Legislationbank-owned.jpg

Homeowners Association (“HOA”) Boards and industry professionals are keenly aware of the financial impact that the economic downturn has had on HOAs throughout California, especially with foreclosures. The difficulty in identifying/contacting the bank who foreclosed on a property, as well as delays in the recording of certain property transfer documents, has hampered the ability of HOAs to quickly reestablish the assessment revenue stream from the new owner of the foreclosed property (often, the bank).

Fortunately, AB 2273 was recently signed into law to add new Section 2924.1 to the Civil Code and amend current Section 2924(b) of the Civil Code. AB 2273 serves two important functions:

  1. It requires the foreclosing party to record a sale within 30 days of the sale to help the HOA identify new owners; and
  2. It shortens the time for HOAs to be notified by the foreclosing party of the change in ownership: 15 days from the date of sale. However, this only applies if the HOA has recorded a “Request for Notice” prior to the property receiving a Notice of Default.
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AB 2273 is another step toward helping HOAs reduce the financial impact the economic downturn is having on their budgets. It also underscores how important it is for a HOA to record a blanket “Request for Notice” pursuant to Section 2924(b). HOA Boards and Managers that are dealing with defaulting properties should contact their HOA attorney to ensure that all appropriate steps are taken to help the HOA quickly reestablish the assessment stream from a foreclosed property.

To read the text of AB2273, click here.

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*Asked & Answeredhoa law firm

AskedMy condominium association is imposing a special assessment against all owners to reimburse it for costs incurred in repairing the structure of an owner’s leaking balcony. Because the balcony is “exclusive use common area” to be maintained by the individual owner, is my association in compliance with Civil Code §1364?

Answered – Yes, your association is in compliance with Civil Code §1364 due to the nature of the damage/maintenance at issue. Civil Code §1364 states that “the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest” (emphasis added).

However, the scope of the owner’s maintenance obligation for her “exclusive use common area appurtenant to [her] separate interest” (in this case, her balcony) extends primarily to the basic upkeep of the balcony’s usable surfaces (e.g., the surface of its flooring). Section 1364 is not intended to require the owner to undertake major structural repairs to the balcony or to otherwise ensure its structural integrity. This interpretation of Section 1364’s requirements is premised upon the recognition that (1) major maintenance decisions/efforts with respect to exclusive use common areas can have a substantial impact on neighboring units, and (2) owners typically retain no ownership interest in exclusive use common areas, despite their exclusive use rights with respect thereto.

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However, if the damage was in any way caused or exacerbated by the owner’s negligence, then your association may be able to seek reimbursement for at least some of the repair costs from the negligent owner. Your condominium association’s lawyer can assist your Board in seeking reimbursement from the appropriate parties to the extent permitted under your association’s governing documents and the California Civil Code.

To submit questions to the HOA attorneys at Tinnelly Law Group, click here.

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bankruptcy1.jpg*New Resource

Community associations (“associations”) often deal with owners overburdened by debt and unable to pay their assessments. These owners may file for bankruptcy to seek financial relief. How does this affect an association? What must an association be aware of? How can an association protect its interests? This blog post addresses these questions while providing a basic outline of the three (3) types of bankruptcies that can affect an association: Chapter 7, Chapter 11, and Chapter 13.

This information can also be found in our new resource entitled “Bankrupt Owners in Your Community”, available for download from our library.

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Our “2012 Legislative & Case Law Update” newsletter is now available in our library!

The 2012 Legislative & Case Law Update provides an overview of the new legislation impacting California Homeowners Associations (“HOAs”) and the community association industry professionals who service them. The new legislation includes, among other things, bills that impose new requirements on Board Member meetings and new limitations on HOAs that wish to restrict rentals in their communities.

The 2012 Legislative & Case Law Update also provides an overview of some important new case law, along with some links to additional resources we have published on the items discussed therein.

Click here to read our 2012 Legislative & Case Law Update

Have questions on any of the new legislation or case law? Click here to send us a question online.

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*Asked & Answeredwriting_check.jpg

AskedOur CC&Rs require my Community Association to maintain the landscaping along a walkway leading up to my home. If the Community Association keeps neglecting to maintain the landscaping along the walkway, can I withhold my assessments until they finally do so?

Answered – No. The duty of owners to pay assessments to their Community Association is absolute. California law recognizes how vital assessment revenue is to the successful functioning of Community Associations, as “[a] system that would tolerate [an owner’s] refusal to pay an assessment because the [owner] asserts a grievance…would threaten the financial integrity of the entire [Community Association] operation.” Park Place Estates Homeowners Assn. v. Naber (1994) . The duty of owners to pay assessments is also codified at Civil Code §1367.1(a).

Regardless of whatever grievances owners may have against their Community Associations, they may not legally withhold their assessments. However, owners are entitled to dispute assessments, as well as fines, late fees, penalties, and collection costs by paying the disputed amount under protest and following the procedures set forth in Civil Code Code §1367.6.

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The best course of action is to bring the matter to the attention of the Community Association’s Board of Directors at their next scheduled meeting and to try to work with them in finding an amicable resolution to the problem.

To submit questions to Tinnelly Law Group, click here.