Assessments

Legislative & Case Law Update (2013) Now Available!

Published on: January 7, 2013 | by Steven J. Tinnelly, Esq.

hoa laws Our 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.

The Basics of AB 805: Overview of Changes in Davis-Stirling Act

Published on: January 2, 2013 | by Steven J. Tinnelly, Esq.

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 It also standardizes terminology, eliminates outdated references to other authorities, groups provisions pertaining to the same subject matter, and reorganizes longer sections into more convenient subparts.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.

AB 2273: Resecuring HOA Assessment Streams from Foreclosed Properties

Published on: October 17, 2012 | by Steven J. Tinnelly, Esq.

*New Legislation

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:

It requires the foreclosing party to record a sale within 30 days of the sale to help the HOA identify new owners; and
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.

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.

HOA’s Ability to Impose Assessments for Maintaining Exclusive Use Common Areas?

Published on: August 10, 2012 | by Steven J. Tinnelly, Esq.

*Asked & Answered hoa law firm

Asked – My 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.

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.

Bankrupt Owners in Your Community

Published on: February 13, 2012 | by Steven J. Tinnelly, Esq.

*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.

2012 Legislative & Case Law Update Now Available

Published on: November 28, 2011 | by Steven J. Tinnelly, Esq.

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.

Right to Withhold Assessments because of Dispute with Association?

Published on: October 26, 2011 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – Our 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.

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.

Borrowing from Homeowners Association Reserve Accounts

Published on: August 2, 2011 | by Steven J. Tinnelly, Esq.

Several clients have recently dealt with situations requiring them to consider the feasibility of borrowing from their reserve accounts in order to satisfy various financial obligations.

California law authorizes Association Boards of Directors to borrow from reserves to supplement monthly operating expenses under certain conditions. Such borrowing is usually done to fulfill an Association’s maintenance, repair, litigation or short-term cash flow needs.

When borrowing from reserves, Association members must be primarily notified of (1) of the intent to borrow from reserves, (2) the reasons for borrowing, and (3) the manner in which the funds will be repaid. Boards of Directors must be diligent in complying with these notice and disclosure requirements and in ensuring that they have a feasible plan for restoring the reserve account within one year.

Prior to electing to borrow from their Association’s reserves, Boards of Directors should consider all available sources of money in addition to other factors. Consideration of (1) realistic repayment sources (e.g., loans from financial institutions, special assessments, etc.), (2) the amount of money actually needed, and (3) the estimated length of time required to restore the reserve account may have a substantial bearing on a Board’s decision whether or not to borrow from reserves. Proper consideration of these factors and diligence in complying with the attending legal requirements will help to ensure that any decision to borrow from reserves is made in the best interest of the Association.

Content by: Jeffrey M. Hylton, Esq.

Turning up the Heat on HOA Collection Practices

Published on: May 26, 2011 | by Steven J. Tinnelly, Esq.

The increase in assessment collection efforts by Homeowners Associations (“HOAs”) is being seen nation-wide. States like California, Nevada and Texas are currently debating new legislation aimed at making some drastic, and potentially harmful, reforms to the ways in which HOAs can pursue and collect delinquent assessments.

In California, there is a proposed bill that would significantly affect a HOA’s ability to collect delinquent assessments. SB 561 will, in a nutshell, make it much more difficult for a HOA to recover the collection costs and fees incurred in connection with collecting delinquent assessments. There is signficant industry opposition to the bill.**

Additionally, some property owners are beginning to take a more agressive stance against HOA collection efforts. In Nevada, investors in foreclosed homes recently filed a new class-action complaint against more than 500 Nevada HOAs. They allege that HOAs have unlawfully allowed collection companies to collect costs that were never incurred by the HOAs.

New legislation and legal challenges concerning HOA collection practices could radically impact the financial and operational structure of HOAs and collection companies. Hopefully, the increase in attention will help to (1) spotlight the tremendous toll that delinquencies are taking on HOAs and (2) provide a clear, settled framework for HOAs to use in their collection efforts.

**To read more about industry sentiments toward SB561, visit CAI’s California Legislative Action Committee’s website.

Credit Card Processing of HOA Assessments: Good Idea?

Published on: May 17, 2011 | by Steven J. Tinnelly, Esq.

Associations are required to levy regular and special assessments sufficient to perform their obligations under their governing documents and Ca. Civ. Code §1366(a). Associations may encounter difficulties in getting their members to pay assessments on a regular and timely basis. In response to these difficulties, some Associations are providing credit card processing of assessment payments as a courtesy to their members and/or an incentive for delinquent members to fulfill their assessment obligations while deferring the actual payment. The fees involved in processing assessments by credit card are then sometimes absorbed by the Association.

Several Managers and Board members have contacted us regarding the propriety of absorbing these fees.

We have prepared an article on this issue which is available for download from our Library. The article is entitled “Absorbing Credit Card Transaction Fees”.

In sum, absorbing these fees is problematic because (1) it results in an inequity for the Association’s members that pay their assessments by cash or check and (2) likely violates the assessment requirements of the Association’s CC&Rs. Associations that provide credit card processing of assessments should ensure that the members paying by credit card are responsible for any transaction fees and costs involved.

For a more detailed discussion of this issue, click here to read the article.

To submit questions to Tinnelly Law Group, click here.