There is no substitute for expertise.HOA law is what we do.

Articles Posted in Boards of Directors

Published on:

hoa insurance*New Library Article

There are instances where a disgruntled homeowner may file a lawsuit against his or her homeowners association (“HOA”). The lawsuit may be based on a variety of claims (i.e., claims involving property damage or alleged malfeasance on the part of the HOA’s Board of Directors). This is one of the reasons why HOAs are legally required to purchase and maintain certain insurance policies designed to protect the HOA and its membership from a variety of risks.

However, problems may arise in response to the actions taken by the HOA and its management once the lawsuit has been served. Those problems generally result from the way in which the lawsuit may have been “tendered” (sent to) to one or more of the HOA’s insurance carriers, including whether it was even appropriate to tender the lawsuit in the first place. This blog post addresses some of those problems and provides guidance to HOA Boards and their management with regard to this issue…

Our attorneys have also published this information in an article that is available for download from our Web site’s library.

Continue reading

Published on:

*New Case Lawhoa-ballots.jpg

Provisions setting forth the qualifications for serving on a homeowners association (“HOA”) Board of Directors are typically found in the HOA’s Bylaws. At the time when these provisions were originally drafted, they may have been insufficient to establish a set of specific qualifications designed to avoid operational issues and potential conflicts of interest. Therefore, HOAs have been traditionally required to formally amend their Bylaws in order to establish, clarify or expand director qualifications. This generally requires the approval of the membership and a formal vote which, as many Boards and industry professionals understand, often acts as a significant hurdle to achieving the HOA’s goals.

However, in light of recent case law, it appears that a less onerous mechanism for enacting new director qualifications may now be available. In Friars Village Homeowners Association v. Hansing (10/9/2013) the HOA adopted an election rule which prevented any member from seeking a position on the Board if that member was related by blood or marriage to any current Board member or other candidate for the Board. Subsequent to the adoption of the rule, a husband whose wife was already serving on the Board sought to nominate himself as a candidate in an upcoming election. There was a provision in the HOA’s governing documents that permitted members to “self-nominate.” However, the Association denied his request to submit his candidacy on the basis of the newly enacted “relationship” rule. The husband then brought suit against the HOA to challenge the validity of the rule on the theory that it exceeded the HOA’s authority and violated his self-nomination rights under the HOA’s governing documents.

The Court ruled for the HOA, noting that the new election rule acted as a qualification which preceded the right to self-nominate, and was therefore not inconsistent with the HOA’s governing documents or governing law. Furthermore, as the rule was based upon the legitimate concern that spouses or relatives might form unfair alliances on the Board, the Court found that the rule was both reasonable and rationally related to the proper conduct of the business affairs of the HOA.

hoa attorney

It is important to note that the Court’s decision was made in relation to the individual facts of the Friars Village case and the specific language found in the HOA’s governing documents. However, the Court’s decision may indeed establish a basis for adopting director qualifications through the implementation of reasonable election rules rather than through formal amendments to the Bylaws. HOA Boards of Directors should therefore consult with their HOA’s legal counsel prior to adopting new election rules to which HOA members may be opposed.

Blog content provided by Tinnelly Law Group attorneys Bruce Kermott and Kai Macdonald.

Published on:

*New Case Lawhoa_election_vote.jpg

As is a common occurrence for HOA Boards, there is often difficulty in obtaining the HOA members’ consent that is required for taking such actions as amending the HOA’s governing documents or undertaking capital improvements. Failure to obtain the members’ consent–whether it is a result of member apathy or disagreement with the Board’s position–often results in wasted resources that were expended in conducting the election procedures required under California law. HOA Boards are therefore always looking for ways in which they can educate the members on the Board’s position and the reasons why the Board believes that the membership should vote a particular way in the upcoming election.

HOA Boards may therefore seek to utilize media outlets such as the HOA’s website and newsletters, as well as posting notices in HOA common areas, in an effort to garnish member support for the Board’s position. However, when such “advocacy” efforts are made as part of an election campaign, California Civil Code Sections 1363.03(a)(1) and (a)(2) require the HOA to provide equal access to its media outlets and common areas to all members who may be advocating opposing points of view. Where the HOA fails to provide such equal access, Civil Code Section 1363.09(a) allows a court to void the election results and even impose civil penalties.

This was the issue in the recent case of Wittenberg v. Beachwalk Homeowners Association, where the court held that a HOA’s election results could be invalidated based upon the fact that the HOA Board had failed its duty to provide homeowners with the type of equal access contemplated by the Civil Code…

Continue reading

Published on:

hoa_construction_manager.jpg*New Legislation

AB 2237 was passed in 2012 by the California Legislature to expand the legal requirements for the “contractors” who are required to have a General Contractor’s “B” license from the State of California.

The “contractors” who must be licensed are defined in Cal. Business and Professions Code Section 7026.1(b)(1). They include “[a]ny person, consultant to an owner-builder, firm, association, organization, partnership, business trust, corporation, or company, who or which undertakes, offers to undertake, purports to undertake, purports to have the capacity to undertake, or submits a bid to construct any building or home improvement project, or part thereof.” (Emphasis added.)

AB 2237 expands upon this definition by adding subsection (2) to Section 7026.1(b). Subsection (2) states that a “consultant” includes a person who either: (A) “Provides or oversees a bid for a construction project,” or (B) “Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project.” This language has spawned questions from community association/HOA managers who are concerned that, as a result of AB 2237, they may now be required to hold a license in order to perform common tasks such as obtaining bids and overseeing the progress of ongoing construction work.

A careful reading of Section 7026.1 and the legislative intent behind AB 2237 reveals that the answer to that question is generally “no.” …

Continue reading

Published on:

*New Case Lawhoa_law_adr_attorneys_fees_recovering_california.jpg

In our recent blog post entitled “Are Attorney’s Fees for ADR Recoverable?” we touched briefly on the recently decided case of Grossman v. Park Fort Washington Association (2012) 212 Cal. App. 4th 1128 (“Grossman”). In response to requests for more information on this issue from our clients and industry partners, we felt it necessary to further address the reasoning behind the court’s ruling in Grossman.

In Grossman, a dispute between a homeowners association (“HOA”) and a homeowner relating to a claimed architectural violation was resolved by the trial court in favor of the homeowners. In awarding the homeowners attorney’s fees and costs arising from both pre and post-litigation activities, the trial court cited Civil Code Section 1354(c), which states that “[i]n an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.” (Emphasis added.)

The HOA objected to the award based on its argument that the statute did not authorize awarding pre-litigation attorney’s fees (fees incurred in participating in ADR) because such fees were not incurred as part of the action (the lawsuit) to enforce the governing documents. However, the appellate court disagreed with the HOA and ultimately affirmed the ruling, noting several key points…

Continue reading

Published on:

*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.

hoa attorney

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.

Published on:

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.

Published on:

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.

Continue reading

Published on:

*New Legislationhoa laws

On August 17, 2012 California Governor Jerry Brown signed into law Assembly Bills 805 and 806 and thus ended the California Law Revision Commission’s trek to reorganize the Davis-Stirling Common Interest Development Act (“the Act”). AB 805 effectively relocates the Act to a new Part 5 (commencing with Section 4000) to Division 4 of the Civil Code, while AB 806 cleans up numerical references to the Act contained in various California statutes.

The Community Association’s Institute (“CAI”) is an organization dedicated to providing “information and education to community associations and the professionals who support them.” CAI’s California Legislative Action Committee (“CAI-CLAC”) had a substantial amount of input in the legislative process over the past two years and ultimately supported AB 805 in its final form.

The law does not become effective until January 1, 2014 to provide HOA industry professionals, homeowners, Board Members and attorneys some time to become acquainted with its new reorganized form.

california hoa

The reorganization purported to clarify current provisions of the Act without making any substantive changes. There are, however, some changes that have been made. Our firm looks forward to assisting our clients and their management in 2013 with understanding those changes and the ways in which they may impact the day to day operations of their communities.

Click here to read CAI-CLAC’s blog post on AB 805.

Published on:

*Asked & AnsweredRental-Issue.jpg

AskedCan the Board amend the HOA’s CC&Rs to limit a homeowner who owns multiple units from renting more than one unit unless they live within the HOA?

Answered – Yes. Provided that the requisite procedures are followed and membership approval is obtained, the Board of Directors does have the authority to amend your HOA’s CC&Rs to include such a rental prohibition. However, because the amendment serves to effectively prohibit a homeowner’s ability to rent out a unit (as compared to a less-severe, reasonable restriction on rentals), the California Civil Code limits the degree to which current homeowners would be bound by the prohibition.

Senate Bill 150 added Section 1360.2 to the California Civil Code to insulate certain homeowners from any “provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests” that was adopted by the HOA on or after January 1, 2012. The only homeowners who may be bound by such rental prohibitions are those who bought their homes after the prohibition had already been adopted and in effect, as well as those who consent to being bound by it.

In your situation, an interesting question becomes how would the Civil Code treat enforcement of such a prohibition against a particular homeowner who owned one unit within the HOA before the prohibition was adopted (“Unit A”), and then later, after the prohibition is adopted, purchases another unit in the HOA (“Unit B”)? The language of Section 1360.2 seems to suggest that the rental prohibition would indeed be valid and enforceable against Unit B. However, a thorough assessment of the facts at issue as they relate to the legislative intent behind Section 1360.2 would be necessary to make a more complete determination.

california hoa

If your Homeowners Association is contemplating the adoption of a new provision to restrict or prohibit rentals, careful consideration must be given to how the Civil Code’s limitations will impact the enforcement of the new provision and whether those limitations will frustrate the homeowners’ goals in adopting it. Consulting with your Homeowners Association attorney will assist in crafting a provision that serves the interests of the homeowners while also preventing costly legal challenges to its enforcement.

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