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Articles Posted in Contracts & Easements

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hoa-parking-space*Unpublished Opinion

Homeowners Association (“HOA”) Boards of Directors and management professionals often encounter disputes with homeowners as to who has the right to use common areas parking spaces within a condominium development. Homeowners often believe that such spaces are part of their separately owned units (their separate property or “separate interest”); that the spaces were “deeded” to them and the HOA is therefore is limited in its ability to regulate, restrict, or reassign the use of those spaces.  For most condominium projects, parking spaces are portions of common area which the HOA may—or in some instances must—reserve for a particular homeowner’s exclusive use, based upon the language of the HOA’s governing documents (i.e., the language of its CC&Rs and/or condominium plan).

We have seen instances where the deed to a unit that was conveyed to the homeowner by the initial developer of the HOA does include a reference a particular common area parking space as assigned to the homeowner for her exclusive use.  However, such deeds often parallel language in the HOA’s CC&Rs and/or condominium plan which support that exclusive use assignment.  In other words, the language of the deed merely reiterates the applicable language of the CC&Rs and/or condominium plan establishing a particular parking space as a portion of common area for which the homeowner listed in the deed has exclusive use easement rights.

The situation becomes more complicated when the exclusive use language in the deed is ambiguous or is not supported by any provisions of the HOA’s governing documents. This was the central issue in Michaelson v. V.P. Condominium Corporation, No. D071215 (Cal. Ct. App. Feb. 21, 2018).  The HOA in Michaelson consisted of an eleven (11) unit condominium development, in which each unit was granted an exclusive right to use an assigned garage parking space as defined in the HOA’s condominium plan. However, the condominium plan also denoted a 12th unassigned garage parking space (“Unassigned Space”).  For some reason, the right to use this Unassigned Space was actually listed in the deed (“Deed”) to a unit (“Unit”) that the HOA’s developer conveyed to the first homeowner of the Unit, which was later conveyed to the Plaintiff homeowner (“Homeowner”).

The HOA accused the Homeowner of fraudulently acquiring the Unassigned Space and demanded that he convey his interest in the Unassigned Space to the HOA. The Homeowner sued the HOA to quiet title on the Unassigned Space based on the following: (1) the Deed included the exclusive right to use the Unassigned Space; or in the alternative, (2) the Unassigned Space was acquired by adverse possession.

The Court quickly disposed of the Homeowner’s adverse possession claim because the tax for the Unassigned Space was paid for by all the HOA’s members and not by the Homeowner (one of the elements for an adverse possession claim in California requires claimant to have paid taxes on the property; See Code Civ. Pro § 325; See also Nellie Gail Ranch Owners Assn. v. McMullin (2016) 4 Cal. App. 5th 982).

With regard to the Deed, the Court found that it was ineffective as to the right of exclusive use of the Unassigned Space despite the fact that the HOA’s CC&Rs specified garage spaces as part of the “exclusive use common area.” This is because the CC&Rs tied the definition of exclusive use common area to the condominium plan, and the condominium plan did not define the Unassigned Space as exclusive use common area. The Court therefore held that the Unassigned Space belonged to the HOA as general common area, and as such the CC&Rs prohibit the transfer of the Unassigned Space without consent of 75% of the eligible mortgagees on the units.

The Court of Appeal affirmed the trail court’s order to grant the HOA’s motion for summary judgment plus attorney’s fees, holding that the Deed was a “wild deed” with ineffective conveyances that conflicted with the reservations contained in the CC&Rs and the condominium plan.

California HOA lawyers This case highlights the often forgotten importance of condominium plans. While CC&Rs will answer most questions regarding ownership and use rights, the CC&Rs for condominium projects will often relate to and reference the development’s condominium plan in significant ways.

-Blog post authored by TLG Attorney, Andrew M. Jun, Esq.

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hoa-condo-solar

The California Solar Rights Act (“Act”), found at Civil Code §§ 714 and 714.1, provides certain protections for homeowners seeking to install Solar Energy Systems (i.e., solar panels) on their properties (“Systems”). The intent of the Act was to prevent associations from broadly banning Systems for aesthetic reasons—whether through an explicit ban, or through onerous architectural restrictions that greatly increase System costs or reduce performance. To that end, the Act rendered void and unenforceable any provision of an association’s governing documents that “effectively prohibits or restricts the installation or use of a solar energy system.” Civ. Code § 714(b). The Act does permit associations to place “reasonable restrictions” on the installation or use of Systems, as defined in Civil Code § 714(b).  However, in reality, those “reasonable restrictions” are extremely limited in scope.  To illustrate, any restriction which increases the cost of a System by more than $1,000, or which decreases its performance by more than ten percent (10%), from what was originally proposed by the homeowner is not a “reasonable” restriction and therefore unenforceable. Civ. Code § 714(d)(1)(B).

For planned developments with detached homes, the application of the Act is relatively straightforward because it applied to Systems that were installed on a homeowner’s “separate interest.”  However, what was less clear was the extent to which the Act applied to homeowners within condominium developments.  In a condominium development, a System would not be installed within or upon a homeowner’s separate interest.  Rather, the System would be installed on common area components such as the roofs, garages or carports.

This issue was at the heart of AB 634 which was signed into law in 2017. AB 634 amends Civil Code § 714.1 and adds Civil Code § 4746. Under the new law, which became effective January 1, 2018, associations are prohibited from establishing policies prohibiting the installation or use of Systems installed on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. It also adds an exemption to the membership approval requirements associated with granting exclusive use of common area to allow for such grants for System installations. Civ. Code § 714.1(b)(1)-(2).  In simple terms, condominium associations are no longer able to broadly prohibit Systems from being installed on common area roofs, garages or carports.

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notboss63Previously, we wrote on a decision published by the National Labor Relations Board (“NLRB”) wherein the NLRB concluded that, where a contracting party has reserved the authority to exercise control over the employees of another, said contracting party will be found to be the “joint employer” of the other entity’s employees.  In the case of Browning-Ferris Industries of California, Inc. (2015) NLRB No. 672 (“BFI”), BFI retained the services of Leadpoint Business Services (“LBS”) to provide staff to one of BFI’s recycling facilities.  Although the contract between BFI and LBS recognized that the personnel staffed by LBS were the employees of LBS, BFI retained some control over the employees. As such, the NLRB concluded that as long as a company retains (e.g., through the execution of a contract) the authority to control the employees of another, said company will be given joint-employer status. (Id. at p. *2.)

The BFI decision caused quite a stir in the realm of common interest developments. As discussed in our prior post, many associations retain a community management firm to facilitate the duties of the association (e.g., solicit bids for common area maintenance and repair). And while the community managers were historically viewed as the employees of the management firm, the BFI case raised some questions with respect to the nature of the relationship between the employees of a management firm and the association.

Nevertheless, on December 14, 2017, the NLRB did an about-face reversing its decision in the BFI case.  In Hy-Brand Industrial Contractors, Ltd. (“Hy-Brand”) the NLRB held that the BFI standard was “a distortion of common law as interpreted by the Board and the courts…[wa]s contrary to the [National Labor Relations] Act…is ill-advised as a matter of policy, and its application would prevent the [NLRB] from…foster[ing] stability in labor-management relations.” ((2017) 365 NLRB No. 156, *2.) Accordingly, the NLRB concluded that a joint-employment relationship will be found where there is evidence demonstrating that an entity has “exercised joint control over essential employment terms (rather than merely having “reserved” the right to exercise control).” (Id. at p. *5 (emphasis original).) Said control must be “direct and immediate,” as opposed to “indirect,” and must be more than control which is “limited and routine.” (Id.)

Although the BFI case has been abrogated restoring the prior position of the NLRB, associations and management companies must continue to exercise caution when hiring vendors to perform services for the association to prevent a finding of a joint-employment relationship. In Heiman v. Workers’ Compensation Appeals Board, the Court of Appeal concluded that the community manager (and by extension, the association) was the joint-employer of an employee of an unlicensed and uninsured contractor. ((2007) 149 Cal. App. 4th 724.)  Under California law, one of the legal consequences for hiring an unlicensed contractor is that the person who hired the unlicensed contractor may be considered an “employer” for tort-liability purposes. (Id. at p. 735.) Since the community manager hired an unlicensed contractor, it was found to be the joint-employer of the injured worker. And, because of the agency relationship between the management company and the association, the association was found liable. (Id. at p. 744.)

California HOA lawyers In sum, despite the shift in position, associations must continue to insulate itself from a finding of joint-employer status by ensuring that it retains only licensed and insured vendors, and adequately sets forth the scope of work and the level of care and skill required to achieve the desired result within its contract with the vendor.  Moreover, the contract must include a provision requiring the contractor to indemnify and hold the association harmless in the event a labor dispute arises between the contractor and its employees.

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

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mechanics-lien

Vendor professionals frequently provide a variety of services on behalf of community associations and individual homeowners.  Under California’s Constitution, unpaid vendors possess a legal right to lien the property upon which they work for the value of their rendered services or furnished material.

AB 534 (Gallagher), effective January 1, 2018, seeks to clarify how mechanic’s liens are to be used in common interest developments by amending Civil Code Section 4615 and by adding new Civil Code sections.

Under existing law, if a vendor intends to preserve the ability to impose a mechanic’s lien at a later time for work performed at a property, then such entity must first secure advance authorization from the property owner. Similarly, under existing law, a vendor seeking to enforce its claim to payment by way of a mechanic’s lien must notify the owner of the property which will be subject to a lien.

In the context of community associations, ownership of common area property can take a variety of forms: that property can be owned by the association, or it can be owned by all of the homeowners jointly, as tenants in common.  As such, the vendor is often burdened by the obligation to identify the legal owner of the common area property when attempting to obtain that advance authorization and when seeking to provide legal notice of an impending lien.

AB 534 circumvents the challenges associated with identifying property ownership by imputing association authorization for a common area improvement to all members, and by making the association the agent for the members for purposes of receiving notices and claims during the lien enforcement process.

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*New Case Lawhoa-boundary-dispute

Rural, equestrian, and large-scale planned developments may include properties with spacious lot sizes bordered by common area lots and open spaces. When property lines are not clearly delineated or easily identified in these communities, there may be instances where a homeowner seeks to expand his property by constructing yard improvements that extend beyond his property line and encroach onto adjacent, HOA-owned common area. If this is not discovered and addressed by the HOA in a timely fashion, there are avenues under California law through which the homeowner may assert that he has obtained an easement over (and in extreme circumstances, actual ownership of) the encroached area. The thought of a homeowner annexing common area for his/her own use is a scary thought, as is the prospect of the HOA failing to prevail in costly litigation that may be needed to reclaim its common area.

Fortunately, the recent holding in Nellie Gail Ranch Owners Association v. McMullin (2016) 4 Cal.App.5th 982 (“McMullin”) helps strengthen a HOA’s ability to defeat a homeowner’s attempt to encroach onto common area and claim it as his own…
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Labor-Unions-Preventive-Practices-1024x683On August 27, 2015, the National Labor Relations Board (“NLRB”) published its decision in the Browning-Ferris Industries of California, Inc. case (“BFI Case”). In that case, Browning-Ferris Industries of California, Inc. (“BFI”) retained the services of Leadpoint Business Services (“LBS”) to provide staff to one of BFI’s recycling facilities. The contract between BFI and LBS recognized, and the parties understood, that the personnel staffed by LBS were the employees of LBS. Nevertheless, given the fact that the contract granted BFI with some control over the employees of LBS, the NLRB concluded that BFI was a joint-employer of LBS thereby obligating BFI to comply with federal labor laws.

In adopting a new legal standard for determining joint-employer status, the NLRB emphasized that such a determination should not be based solely on actual control over the employees of another, but the “existence, extent, and object of the putative joint employer’s control.” (Browning-Ferris Industries of California, Inc. (2015) 2015 NLRB No. 672, *12 (Emphasis added).) Otherwise, employers would be able to insulate themselves from their responsibility to comply with federal labor laws. (Id. at p. *21) Accordingly, as long as a company retains (e.g., through the execution of a contract) the authority to control the employees of another, said company shall be given joint employer status. (Id. at p. *2.) This is true even if control is exercised indirectly (e.g., through an intermediary). (Id.)

Many associations retain a community management firm for the purpose of executing the duties of the association. These community management firms in turn employ community managers and support staff to manage these associations. While historically recognized as the employee of the community management firm (and an independent contractor of the association), the BFI Case raises some questions with respect to the nature of the relationship between the employees of a community management firm and the association. Accordingly, associations must be cognizant that a Court may find that it is a joint employer of the community manager (and support staff), notwithstanding the fact that it exercises no direct and immediate control over said manager.

Similarly, associations and management companies must take care when hiring maintenance and service providers for the community.  When managers, committee members, or board members are conducting job walks with a contractor’s employee, reviewing specifications, or receiving invoices, the management company and the association may become joint employers. In Heiman v. Worker’s Compensation Appeals Board, Cal: Court of Appeal, 2nd Appellate Dist., 3rd Div. 2007 (“Heiman”), a community association manager hired an unlicensed and uninsured contractor on behalf of the association to install rain gutters on the condominium buildings.  An employee of the contractor was seriously injured on the first day of the project and sued the contractor, management company, and association for workers’ compensation.  The Court held that the contractor, the association, and the management company were all joint employers because the contractor hired the injured employee, and the management company, as agent of the association, hired the contractor.  The BFI Case seems to affirm this decision.

California HOA laws In order to insulate the association from a possible finding of joint-employer status, the association should ensure that its contract with independent contractors, requires all proper licenses and insurance, adequately sets forth the desired results, and sets forth the level of care and skill to be used in accomplishing the desired results. (See Id. at p. 12 (“mere ‘service under an agreement to accomplish results or to use care and skill in accomplishing results’ is not evidence of an employment, or joint-employment relationship”).) The agreement should also include a provision that requires the contractor to indemnify and hold the association harmless in the event a labor dispute arises.

Blog post authored by TLG attorney, Matthew T. Plaxton.

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hoa vendorsOne of the primary purposes of any homeowners association (HOA) is to manage, maintain and repair the common areas throughout the HOA’s development. This naturally requires the HOA to contract with third-party vendors to furnish goods or services to the HOA (e.g., landscaping, construction, remediation, painting, plumbing, etc.). We are consistently surprised at how some Board members and management professionals fail to recognize how the HOA’s use of improperly vetted vendors can result in potentially significant legal and financial implications for the HOA, among other problems. Therefore, the need to properly vet vendors—and their contracts—is critical before the Board executes any vendor’s contract on behalf of the HOA.

We previously drafted a library article entitled “HOA Concerns in Contracting with Vendors” that provides some guidance as to how a HOA’s Board and Managing Agent can protect the interests of the HOA and its members. This blog post touches on some of the information contained in that article, and sets forth some recommended procedures which should be utilized before any vendor begins work at the HOA’s development.

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HOA-water-intrusion-patio.jpgMost every set of Homeowners Association (“HOA”) CC&Rs contain a provision prohibiting conduct which constitutes a “nuisance.” That conduct often includes “noxious, illegal or offensive activities,” anything which “unreasonably interferes with a resident’s right to quiet enjoyment” and/or “endangers their health or annoys or disturbs” them. We have blogged about how such nuisance provisions may be employed to resolve issues such as the conduct of tenants, activities in the common area, and second-hand smoke transmission. However, a recent unpublished ruling of a California appeals court indicates how nuisance provisions may also extend to situations involving improvements constructed or maintained by a homeowner.

In PGA West Residential Association, Inc. et al., v. Mork (2014) Cal. Ct. App. No. E054276 (“PGA West“), the Defendant homeowners (the Morks) and the Plaintiff homeowners (the Wyatts) owned adjacent, freestanding condominium units within the PGA West Residential Association (“Association”). In 2008, the Wyatts discovered the presence of mold and moisture damage within the interior of their unit. The Wyatts concluded that the water had entered into their unit through an exterior common area wall (“Common Wall”) separating their unit and the Morks’ patio (“Patio”). The Wyatts then sued both the Morks and the Association for violating the restrictive covenants set forth in the Association’s CC&Rs. The Association also sued the Morks for breach of the CC&Rs, breach of contract, and negligence–alleging that the Morks had altered the drainage in the Patio and, as a result, caused water to flow under the Common Wall and into the Wyatts’ unit.

At trial, both the Wyatts and the Association presented evidence that the Morks had altered the original grade of the Patio in the Morks’ course of constructing a swimming pool, sprinkler system and other improvements in the Patio area. The Morks’ conduct resulted in surface water which drained away from the Morks’ unit ultimately collecting into a 2′ wide planter (“Planter”) that extended the length of the Common Wall. In their defense, the Morks argued, among other things, that they were not responsible under the CC&Rs for maintaining the Patio or the Planter–that those areas were designated as “Limited Common Areas” under the CC&Rs to be maintained by the Association…

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hoa-gateAn easement provides an individual with the legal right to a specific and definable use of another’s property. A homeowners association’s (“HOA’s”) governing documents (i.e., “CC&Rs”) often provide numerous easement rights to its members for access and use of the HOA’s common areas and recreational facilities. While those easement rights are reserved for the benefit of the HOA’s members, their guests and tenants residing in the HOA’s development, it is not uncommon for non-residents and general members of the public to utilize HOA common area facilities such as walkways, trails and parks. HOAs may run into issues when trying to exclude non-residents from those areas, and may be reluctant to take more formal measures needed to do so (i.e., the installation of controlled access gates, the use of security personnel, etc.).

However, if a HOA fails to take such measures and fails to actively prohibit non-residents from accessing the HOA’s common area facilities, the open and consistent use of those facilities by non-residents may ultimately result in the creation of “prescriptive” easement rights for those non-residents. In the recent unpublished decision in Applegate Properties, Inc. v. Coronado Cays Homeowners Association (“Applegate“), the California Court of Appeals held that such prescriptive easement rights had been created over the common area of the Coronado Cays Homeowners Association (“Association”).

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hoa-records.jpg*New Library Article

There are numerous records and items of information maintained and generated by a homeowners association (“HOA”) in the course of its operations. It is common for a HOA member to request copies of such records and information, especially in connection with an ongoing dispute the member may have with the HOA. Upon receipt of such a request, HOA boards and management professionals often have questions concerning the scope of the HOA’s responsibilities in responding to the request and in ultimately providing the member with the requested records and information.

The California Civil Code contains several provisions governing (1) the degree to which a HOA member is entitled to inspect and to copy certain “association records,” (2) the degree to which certain association records are not subject to inspection or copying by a member, and (3) the process through which the HOA must produce or provide access to its records in response to a member’s request. This blog post provides an overview of these provisions, as well as some general guidance for HOA boards and management professionals on this issue.

*Note: Our attorneys have also published this information in a new article entitled “Inspection and Copying of Association Records” that is available for download from our Web site’s library.

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