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Articles Posted in Contracts & Easements

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hoa-pesticide-warning.jpg*New Library Article

California Code of Regulations (CCR) Sections 6000 through 6619 regulate the use of pesticides and pest control operations. Much of these Sections do not apply to residential homeowners associations (“HOAs”). However, there is one Section that contains various notification requirements that a HOA must satisfy when pesticides are applied in its community: CCR Section 6618 – “Notice of Applications.”

In sum, CCR Section 6618 requires certain notifications to be provided to the “operator” of the property where pesticides are being applied, as well as to persons whom the operator has reason to believe may enter the property during and after the application period. Unfortunately, CCR Section 6618 is vague and somewhat confusing to interpret, especially due to its references to “fieldworkers,” “agricultural plant commodities,” and “commercial and research production.” As a result, a number of our HOA clients have requested guidance on the extent to which they must comply with CCR Section 6618, as well as the steps needed to do so.

This blog post addresses this issue and provides some generalized recommendations for HOAs and their management. It also includes information we obtained from state and local entities that enforce these regulations: the California Department of Pesticide Regulation (“DPR”) and the Orange County Agricultural Commissioner’s Office (“OCAC”). As discussed below, HOA vendors that perform pest control services have a major role in providing HOAs with the pesticide label and application information that must be disclosed to the HOA’s members pursuant to CCR Section 6618…

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

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*New Case LawHOA-insurance-defense.jpg

In a recent blog post we addressed the importance of involving the HOA’s legal counsel in the decision as to whether a lawsuit brought against the HOA should be tendered to one or more of the HOA’s insurance carriers. The recent case of San Miguel Community Association v. State Farm General Ins. Co. (October 1, 2013) (Cal.App.4th, No. G047738) (“San Miguel”) touched on this issue. Although the ruling in San Miguel focused primarily upon the scope of an insurer’s obligation to defend a HOA under the HOA’s insurance policy, the ruling underscores the importance of reviewing, understanding, and if necessary, seeking professional guidance regarding the scope of insurance coverage afforded to a HOA under its insurance policies.

In San Miguel, two homeowners sought to force the HOA to take action to curb ongoing parking violations within the community. After the HOA refused to take action, the homeowners demanded the HOA’s participation in mediation, thereby prompting the HOA to tender the matter to its insurance carrier, State Farm. In responding to the HOA, State Farm noted that the claims brought by the homeowners did not seek the recovery of monetary damages, and were therefore insufficient to trigger State Farm’s obligation to defend the HOA or to reimburse the HOA for its defense costs…

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hoa-manager-construction.jpg*New Legislation

We have previously blogged about the introduction of SB 822 by the California Legislature earlier this year. SB 822, in part, clarifies recent amendments to the California Business and Professions Code relating to “contractors” whom are required to be licensed by the state. The clarifying language was introduced in the wake of the confusion and concern that had surfaced regarding whether community association (“HOA”) managers were required to hold a contractor’s license in order to perform common tasks such as obtaining bids and overseeing the progress of ongoing construction work.

Thanks to the efforts of CAI’s California Legislative Action Committee (“CLAC”), SB 822 was recently signed into law by Governor Brown and will take effect January 1, 2014. SB 822 adds the following provision to Section 7026.1(b) of the Cal. Bus. & Prof. Code:

“The term “contractor” or “consultant” does not include a common interest development manager, as defined in Section 11501, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined in subdivision (d) of Section 11500.”

However, this does not mean that HOA managers should interpret this language as a “green light” to act as de facto construction managers. Doing so could expose the HOA, the manager and the management company to liability in the event a construction project goes south. How then can a HOA manager and Board avoid this problem without having to hire an independent construction manager for every project?…

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accolade ribbon-blog.pngThe Tinnelly Law Group has secured a favorable settlement in a breach of contract case for one of our HOA clients located in Newport Beach, California.

The Defendant homeowner was refusing to grant the HOA access to the Owner’s condominium unit for the limited purpose of placing a protective safety barrier between the sliding glass balcony door and the balcony while the HOA performed structural repairs to the underside of the balcony. After Internal Dispute Resolution failed and all efforts were exhausted to secure a non-judicial resolution, the HOA was forced to file a lawsuit seeking injunctive relief. After securing injunctive relief for our client, our attorneys then obtained a 100% attorneys’ fees and costs award. Such 100% attorneys’ fees awards are incredibly rare.

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The Tinnelly Law Group strives to resolve our clients’ disputes through non-judicial means wherever possible. However, when issues do result in litigation, our clients take comfort in knowing that our attorneys provide the highest quality representation available, and that our entire team remains committed to securing the best possible outcome.

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hoa contractor.jpgWe recently blogged about some concerns which have surfaced in the HOA industry regarding the impact of new contractor licensing requirements. AB 2237 was passed in 2012 by the California Legislature to expand on the definition of the “contractors” who must be licensed by the state. That expanded definition includes language which could be read to require common interest development (“CID” aka “HOA”) managers to have a contractor’s license in order to perform common tasks such as obtaining bids and overseeing the progress of ongoing construction work.

Our blog post addressed how a careful reading of the statutes along with the legislative intent behind AB 2237 reveal that HOA managers are not intended to be “contractors” that are required to hold a license. Fortunately, SB 822, introduced earlier this year, now includes a clarifying amendment to specifically exclude HOA managers from the definition of a contractor:

“This bill would provide that the term ‘contractor’ or ‘consultant’ does not apply to a common interest development manager, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined.”

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SB 822 validates our belief that HOA managers were not intended to be subject to the new contractor licensing requirements. SB 822 is likely to pass and you can track the bill’s progress by clicking here.

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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.” …

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*Asked & Answeredhoa law firm

Asked As a HOA member, do I have the right to see a copy of a lease agreement pertaining to a home that was acquired by my HOA through foreclosure of an assessment lien?

Answered – Yes, you may request to see a copy of the lease agreement. Under Civil Code §1365.2(a)(1)(D),a HOA member is entitled to inspect certain “Association records” for any “proper purpose reasonably related” to her interests as a member of the Association. “Association records” include “[e]xecuted contracts not otherwise privileged under law.” 1365.2(a)(1)(D).

The term “privileged” in Civil Code §1365.2(a)(1)(D) essentially pertains to confidential or sensitive information, as well as records/communications which are protected by attorney-client privilege. A standard lease agreement between a HOA and a renter is generally not a “privileged” contract and is therefore subject to inspection as an “Association record.”

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The lease agreement may, however, include confidential information such as social security numbers. The HOA Board of Directors and/or management should ensure that such confidential information is adequately redacted from the lease agreement prior to providing it to a member for inspection. A HOA that has questions or concerns regarding the disclosure of HOA lease agreements and the information contained therein should consult with the HOA’s legal counsel.

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

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*New Case Lawhoa law firm

The United States Bankruptcy Court in California recently ruled in a case that may impact the terms under which Homeowners Associations (“HOAs”) contract with collections companies to pursue delinquent assessments.

In In re Antonio Cisneros, the debtor, Cisneros, owned two properties within the HOA and had fallen behind on his assessment payments. Cisneros ultimately filed Chapter 13 bankruptcy in order to save his properties and cure his assessment arrears. The HOA had contracted with a collections company to recover the delinquencies from Cisneros. That contract specifically stated that if the collections company was “unable to collect fees or costs from the delinquent Owner or other responsible party, [then the] Association shall not be responsible for such fees or costs.” (Emphasis added.) Accordingly, under the terms of the contract, the HOA was under no true obligation to pay the fees or costs incurred by the collections company. That contractual provision was what the Bankruptcy Court relied upon in disallowing the collections company’s claims to recover its roughly $14,000 in collections fees and costs from Cisneros…

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gate-acc.pngThe Tinnelly Law Group has secured a favorable settlement in a breach of contract case for one of our HOA clients located in Fullerton, California.

The Defendant security company entered into a contract with the HOA to install an integrated entry gate system for several streets leading into and out of the community. Shortly after the installation was completed, the HOA began experiencing severe mechanical problems with the gate operators and other aspects of the integrated gate entry system. When the Defendant refused to take the appropriate action to repair the system and ensure it’s permanent functionality, the HOA filed suit for breach of contract.

The terms of the settlement required a judicial determination as to the prevailing party and the “reasonable” attorneys’ fees amount to be awarded with respect thereto. After arguing those issues via a motion for attorneys’ fees, the court declared our client the prevailing party and found that all of our client’s attorneys’ fees (nearly $200,000) were reasonable. Such 100% attorneys’ fees awards are incredibly rare.

Our client’s Board of Directors and management praised attorney Bruce Kermott and the entire TLG team for their efforts in securing such a fantastic outcome for the HOA and its membership:

“This is truly great news! Thanks Bruce for all your hard work on this case!”
“Thanks again for your dedication and hard work!”
“Your thoroughness, communication and responsiveness throughout this process was fantastic. Thank you!”

condo lawyer

The Tinnelly Law Group strives to resolve its clients’ disputes through non-judicial means wherever possible. However, when issues do result in litigation, our clients take comfort in knowing that our attorneys provide the highest quality representation available and that our entire team remains committed to securing the best possible outcome.

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*New Case Lawhoa law firm

On August 16, 2012 the California Supreme Court announced its decision in a case that will undoubtedly impact homeowners associations (“HOAs”), developers, owners and insurers in disputes arising from construction defects. The ruling in Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC sets the stage for construction defect disputes to be resolved via binding arbitration as opposed to jury trials.

The Court’s ruling in Pinnacle reverses the lower courts’ decisions which previously hampered the enforceability of arbitration provisions contained in recorded Declarations of Covenants, Conditions and Restrictions (“CC&Rs”). Central to the Court’s ruling was its recognition that CC&Rs constitute a contract and that there is strong public policy favoring arbitration/alternative dispute resolution over litigation–a public policy which is embodied in various Civil Code provisions pertaining to HOAs.

In reaching its conclusion, the Court reasoned that “the Davis-Stirling Act ensures that [CC&Rs]–which manifest the intent and expectations of the developer and those who take title to property in a [HOA]–will be honored and enforced unless proven unreasonable. Here, the expectation of all concerned is that construction disputes involving the developer must be resolved by the expeditious and judicially favored method of binding arbitration.” Accordingly, unless an arbitration provision contained in the CC&Rs is deemed “unreasonable,” a developer is entitled to rely on the terms of the contract and the enforcement of the arbitration provision.

california hoa

The ruling in Pinnacle will create far-reaching and immediate impacts in the HOA industry. Depending on the terms of the CCRs, HOAs and owners seeking to pursue claims against the original developer may now be contractually obligated to forego litigation for binding arbitration. However, Developers wishing to compel binding arbitration may be precluded from doing so to the extent that the binding arbitration provision at issue fails to meet the “reasonableness” test implied by the Court.