Enforcement

SB 407 Signed! Legislation Broadens Assembly and Speech Rights within HOAs

Published on: September 13, 2017 | by Steven J. Tinnelly, Esq.

hoa-campaign-meeting

New Civil Code 4515 will be added to the Davis-Stirling Act to ensure that homeowners association residents may exercise their rights of peaceful assembly and political speech.

HOAs are playing an increasing role in the lives of California’s residents as compared to the roles traditionally played by cities and counties. HOAs are growing in number, size and sophistication. As a result, a HOA’s actions and governance structure often have more immediate effects on the issues homeowners feel “closest to home,” such as property values and community services. This is why California law will at times hold HOAs—which are private corporations—to the standards of “quasi-governmental entities.”

An example of this was seen several years ago when legislation was enacted to grant every HOA member the right to use common area meeting spaces for purposes related to a HOA’s election. The intent was to promote constitutional principles of freedom of speech and assembly; to allow HOA members to meet for purposes related to an ongoing HOA campaign (i.e., a HOA board election), and to do so without any unreasonable impediment imposed on them by their HOA.

SB 407 (Wieckowski) is a newly signed bill that takes this idea much further. It was introduced in response to what California’s legislators felt to be a continuing abuse of power by HOAs in using non-solicitation rules to prohibit non-commercial free and political speech:

“Blanket prohibitions on commercial solicitation are often so broadly written that they could be interpreted to prohibit non-commercial free and political speech.”

“Significant anecdotal evidence demonstrates that HOAs have extended the restrictions of door-to-door solicitation to political speech.”

“Overly broad rules and policies discourage the civic participation of HOA members and criminalize free political expression.”

Court Concludes Rental Restrictions are Reasonable

Published on: July 5, 2017 | by Steven J. Tinnelly, Esq.

*Unpublished Case

Recently, many residential common interest developments have experienced an influx in the number of short-term rentals within their community. This problem is exacerbated by the increased popularity of websites such as Airbnb and HomeAway. Although profitable, short-term rentals have a significant negative impact on community associations, such as increased damage to common area and violations of the Association’s governing documents. To address these concerns, many associations are amending their CC&Rs to include restrictions imposing a minimum lease period (e.g., thirty days). In a recent unpublished opinion, the California Court of Appeal upheld such a restriction as reasonable.

In Ocean Windows Owners Association v. Spataro, the Court affirmed the decision of the trial court granting the Association’s petition to reduce the requisite approval necessary to amend their CC&Rs pursuant to Civil Code section 4275. The proposed amended CC&Rs included, among other things, a provision imposing a minimum lease term of “thirty (30) consecutive days in any one (1) calendar year….” A homeowner filed an objection to the petition stating that the record was void of any facts sufficient to support a conclusion that the amendments “were necessary for the good of the community.” The Court of Appeal rejected this argument for two reasons.

At the outset, the Court noted that the homeowner had misstated the standard under Civil Code section 4275. Specifically, Civil Code section 4275(c)(5) requires that the “amendment is reasonable.” Reasonableness has been defined as:

Not arbitrary or capricious, rationally related to the protection, preservation and proper operation of the property and the purposes of the Association as set forth in its governing instruments, and is fair and non-discriminatory.

(Fourth La Costa Condominium Owners Assn. v. Seith (2008) 159 Cal. App. 4^th 563, 577; see Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4^th 361, 382 (citations omitted).)

Using the appropriate standard, the Court concluded that the rental restriction was reasonable. The Court’s decision was predicated, in large part, on the declarations of the Association’s community manager and its general counsel. Both averred that short-term rentals had resulted in damage to the common area, increased costs and violations of the governing documents, and the inability or difficulty with obtaining financing due to the association’s appearance as a “condotel.” As such, the Court concluded that there was substantial evidence to support the conclusion that the rental restriction contained in the amended CC&Rs was reasonable (i.e., rationally related to the protection, preservation and operation of the community as a whole).

Although unpublished, this case underscores the courts’ awareness of problems affecting communities with short-term rentals, and their willingness to assist associations in addressing the issue. HOA Boards that are dealing with these types of issues should consult with their HOA’s legal counsel for guidance and recommendations.

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

Business Judgment Rule Doesn’t Apply When the Board Acts Outside its Authority

Published on: June 14, 2017 | by Steven J. Tinnelly, Esq.

*Unpublished Case

ISSUE:

Is an HOA Board of Directors (“Board”) entitled to protection under the Business Judgment Rule (“BJR”) when it applies an unambiguous view restriction contained in the governing documents in a manner other than written?

RULE:

No. In Lingenbrink v. Del Rayo Estates Homeowners Association, 2017 WL 1075062 (“Lingenbrink”), the Court of Appeal concluded the BJR only applies to matters that are within an HOA Board’s discretion. A Board does not have the discretion to interpret or re-write a restriction where the meaning of the restriction is perfectly clear.

ANALYSIS:

The HOA consists of eighteen (18) “high end” homes in Rancho Santa Fe built on 21 lots, each with sweeping views of the Pacific Ocean. The CC&Rs contain very specific language that protects each Lot’s view as follows:

“No tree, hedges or other plant shall be so located or allowed to reach a size or height which will interfere with the view from any Lot and, in the event such trees, hedges or other plant materials do reach a height which interferes with the view from another Lot, then the Owner thereof shall cause such tree(s), hedge(s) or other plant material[(]s) to be trimmed or removed as necessary.”

Governor Brown Declares the End of the Drought

Published on: April 20, 2017 | by Steven J. Tinnelly, Esq.

water-rain-raindrops-drops

On April 7, 2017, Governor Brown signed Executive Order B-40-17, ending the drought state of emergency in most of California. Drought restrictions will remain in effect in Fresno, Kings, Tulare, and Tuolomne counties, which continue to face drinking water shortages and diminished groundwater supplies. The new Executive Order rescinds the emergency proclamations from January and April 2014, along with four drought-related executive orders.

Over the last few years, the California legislature has passed several bills aimed at water conservation within community associations. AB 2100 amended Civil Code Section 4735 to prohibit associations from fining or threatening to fine an owner for failing to water vegetation or lawns during a state or local government-declared drought. SB 814 also authorized penalties for excessive residential water use during periods of government-declared droughts. Now that the state of emergency has been lifted, these laws are no longer in effect, provided the local jurisdiction has not declared a local drought.

AB 2104 further amended Section 4735 to restrict an association from prohibiting low-water using plants as a group, and AB 349 amended Section 4735 to restrict an association’s authority to prohibit artificial turf. Although the drought restrictions have been lifted, this legislation protects homeowners from having to reverse or remove any landscaping measures that were installed in response to the government-declared drought.

The State Water Resources Control Board (SWRCB) also adopted emergency regulations that subject associations to fines of up to $500 per day for violating the provisions of Section 4735. These regulations will remain in effect until November 25, 2017, or until they are modified or repealed by SWRCB.

The decision to lift drought restrictions was partly based on unprecedented water conservation. Californians saved more than 20% of urban water since the Governor mandated water use reductions in 2015. Despite the record levels of water conservation, the State cautions, “This drought emergency is over, but the next drought could be around the corner,” said Governor Brown. “Conservation must remain a way of life.”

Executive Order B-40-17 continues the provisions in the previous Executive Order, “Making Water Conservation a California Way of Life.” Permanent restrictions prohibit the use of potable water for:

hosing off sidewalks, driveway and other hardscapes;
washing automobiles with hoses not equipped with a shot-off nozzle;
using non-recirculated water in a fountain or other decorative water feature;
watering lawns in a manner that causes runoff, or within 48 hours after measurable precipitation; and
irrigating ornamental turf on public street medians.

The SWRCB will continue to plan for future droughts and promote water conservation as a way of life, which may result in more legislation.

Blog post authored by TLG Director of Business Development, Ramona Acosta.

What Does Legalized Marijuana Mean for Your HOA?

Published on: February 15, 2017 | by Steven J. Tinnelly, Esq.

hoa-marijuana-plants

Adult possession and use of marijuana for recreational purposes is now legal in California as a result of the passage of Proposition 64 (“Prop 64”) in 2016. Prop 64 is comprised of sixty-two (62) pages of detailed, complicated, and at times confusing regulations and statutory revisions to various California codes. We have been asked by various homeowners association (“HOA”) clients about the significance of Prop 64 and what impact, if any, it has on their ability to regulate marijuana within their private communities.

Restrictions on Marijuana Smoking
Virtually every set of HOA governing documents contains a provision that prohibits activities which serve as a nuisance to residents within the HOA’s development (i.e., the transmission of “noxious odors”). These provisions have been relied upon by HOAs to restrict smoking (i.e., cigarettes, pipes, cigars, vaporizers, etc.) in common areas and, in some instances, within the separate interests (i.e., the lots or units) that are owned by each of the HOA’s members. Fortunately, Prop 64 has not altered a HOA’s regulatory authority with respect to the smoking of marijuana. Section 4.6 of Prop 64 (adding Section 11362.3 to the California Health & Safety Code) provides in relevant part that nothing in the statute permitting personal use, possession, cultivation, etc. of marijuana shall be construed to permit any person to “[s]moke marijuana or marijuana products in a location where smoking tobacco is prohibited.” Thus, valid and enforceable HOA restrictions against tobacco smoking may still be used to restrict marijuana smoking as well. Notably, the term “smoke” as used in Prop 64 also includes the use of electronic smoking devices and vaporizers.

Restrictions on Marijuana Cultivation
One of the more interesting issues that HOAs may encounter in the wake of Prop 64 relates to the growing or “cultivation” of marijuana plants. In 2015, new Civil Code § 4750 was enacted to grant homeowners within HOAs the right to use their backyards for “personal agriculture.” Civil Code § 1940.10 was enacted at the same time to clarify that “personal agriculture” as used in Section 4750 means the use of land where an individual cultivates “edible plant crops for personal use or donation,” and that the term “plant crop” does not include “marijuana or any unlawful crops or substances.” Thus, prior to Prop 64’s passage, a HOA’s authority to prohibit backyard marijuana gardens was relatively clear.

Prop 64 appears to have muddied this issue. It added Section 11362.1 to the Health & Safety Code which provides in relevant part that, “notwithstanding any other provision of law,” it is lawful for persons 21 years of age or older to “[p]ossess, plant, cultivate, harvest, dry or process not more than six living marijuana plants.” Some may interpret this language as overriding the Civil Code’s restrictions on the type of “personal agriculture” which may be cultivated in a homeowner’s backyard—especially in light of the fact that marijuana is technically no longer an “unlawful crop or substance.”

Prop 64 also added Section 11362.2 to the Health & Safety Code to allow for restrictions to be imposed on the outdoor cultivation of marijuana. It provides in relevant part that a “city or county” may “enact and enforce reasonable regulations” on the cultivation of marijuana, provided, however, that such regulations may not be used to completely prohibit the cultivation of marijuana “inside a private residence, or inside an accessory structure to a private residence located upon the grounds of a private residence that is fully enclosed and secure.” However, this language appears to empower only cities or counties to prohibit outdoor marijuana cultivation, and does not adequately address whether such prohibitions may also be enacted and enforced by HOAs.

Prop 64 does provide that the rights to cultivate marijuana do not preempt the “ability of an individual or private entity to prohibit or restrict…[the cultivation of marijuana]…on the individuals’ or entity’s privately owned property.” Thus, a HOA’s ability to prohibit the cultivation of marijuana on its “privately owned property”—meaning the HOA’s common area—is relatively clear. What is less clear is whether a HOA that exists within a city or county that does not restrict outdoor marijuana cultivation may nevertheless impose such restrictions on a homeowner’s separately owned residential lot. In other words, may a HOA restrict the outdoor cultivation of marijuana on property within its development that the HOA technically does not own? For HOAs that exist in cities or counties that do not already restrict the outdoor cultivation of marijuana, there is no clear statutory answer to this question. However, we have encountered instances in HOAs where the smell from marijuana plants and blooms are so strong that they rise to the level of a nuisance which is prohibited under the CC&Rs, and may therefore be restricted on those grounds. HOAs dealing with this issue should seek guidance from their legal counsel.

SB 814: Penalties for Excessive Water Use

Published on: January 17, 2017 | by Steven J. Tinnelly, Esq.

sb-814-california-water-usage-hoa-e1484179755582 California is experiencing the worst drought in over a century. As a result, the California Legislature has enacted a number of laws aimed at water conservation. Existing law requires the Department of Water Resources and the State Water Resources Control Board to take appropriate actions to prevent unreasonable water use. To further the goal of preventing unreasonable water use, Governor Jerry Brown signed into law new legislation prohibiting excessive water use by residential customers during a drought (SB 814).

Specifically, SB 814, which adds Chapter 3.3 to Division 1 of the California Water Code, requires “urban water suppliers” to “establish a method to identify and discourage excessive water use.” (Water Code § 366(b).) Accordingly, a water supplier may adopt one of the following methods: (1) a rate structure using block tiers, water budgets, penalties for prohibited uses, and rate surcharges, or (2) an ordinance, rule or tariff (collectively, “Ordinance”) that defines the procedure by which water suppliers are to recognize and deal with excessive water use. A violation of an Ordinance is punishable by a fine of at least $500 per one hundred (100) cubic feet of water, or seven hundred forty-eight (748) gallons, above the established threshold.

In light of the foregoing, Associations should be mindful of the new prohibition against excessive water use, especially in condominium projects where the units are not separately metered.

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

HUD Establishes Rules Regarding Discriminatory Activity and Liability under the Fair Housing Act that will Directly Impact Homeowners Associations

Published on: September 30, 2016 | by Steven J. Tinnelly, Esq.

family The U.S. Department of Housing and Urban Development (“HUD”) recently adopted regulations for evaluating claims of harassment in housing and housing related transactions because of race, color, religion, sex, national origin, disability, or familial status under Title VIII of the Civil Rights Act of 1968 (“Fair Housing Act”). The new regulations, which will directly impact Homeowners Associations (“HOAs”), are set to take effect October 14, 2016.

Brief Background

Both Courts and HUD have long recognized that the Fair Housing Act prohibits harassment in housing and housing related transactions on account of race, color, religion, sex, national origin, disability, or familial status in the same way that Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits harassment on these same basis in an employment setting. Prior to HUD’s adoption of these new regulations, Courts often applied Title VII standards when evaluating claims of harassment in the housing setting. However, because employment and home settings are different environments, the application of one to another is not always appropriate. To address these deficiencies, HUD recently adopted formal standards for evaluating claims of harassment under the Fair Housing Act.

The new regulations directly impact HOAs because their directors and officers are the ones who are responsible for investigating an owner’s or tenant’s claim of housing related harassment. Furthermore, liability for harassment under the Fair Housing Act can be imposed not just on the HOA but on its officers and directors for their own actions as well as the actions of third-party agents like a management company.

Sober Living Homes in your HOA?

Published on: March 30, 2016 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – We have seen several sober living homes surface within our community. What can our HOA do to prohibit these facilities? Aren’t they businesses which violate the commercial use restrictions in our CC&Rs or other HOA laws?

Answered – Regardless of how you feel about sober living homes, it is certainly a hot issue that numerous communities are dealing with–particularly coastal communities. HOA CC&Rs often contain provisions that prohibit the non-residential uses of properties or the use of properties for anything other than “single family” residential purposes. However, the California Legislature has, through the Health & Safety Code, mandated that a sober living home (an “alcohol or drug abuse recovery or treatment facility“) which services six (6) or fewer persons to be deemed “a residential use of property and a use of property by a single family, notwithstanding any disclaimers to the contrary.” (H&S Code § 11834.25.) This was done in order to immunize sober living homes from City, County and HOA restrictions (i.e., CC&Rs restrictions) on the use of properties for non-residential purposes. The Legislature has even declared it to be the public policy of California to “encourage” the development of sober living homes. To learn more about the law in this area, click here to read our article on FindHOALaw.com.

In situations where a HOA could potentially take action against a sober living home, it is usually because the home is continually violating some other provision of the CC&Rs which the HOA can enforce. However, in our experience, sober living home operators are savvy; they know the playing field and how to keep themselves out of trouble. Moreover, these facilities are generating substantial amounts of monthly revenue from insurance companies and private parties who cover the costs for patients to stay at the home. That revenue dwarfs any potential fines that a HOA might be able to impose for other CC&R violations which may stem from the home’s operations.

Efforts which have been taken by cities against sober living homes have also proven ineffective, largely because recovering addicts are a protected class under the Americans with Disabilities Act (ADA) and other Federal statutes. For example, the City of Newport Beach in 2015 settled a lawsuit brought against the City by several sober living home operators. The operators sued the City over an ordinance it adopted which sought to restrict the facilities’ operations. The operators asserted that the ordinance violated anti-discrimination and fair housing laws. In addition to spending $4 million in legal fees, the City had to pay the sober living home operators $5.25 million as part of the settlement.

Any meaningful restrictions to curb the growth of these facilities within private residential communities will likely need to be enacted at the State level (and potentially the Federal level). California HOAs are virtually powerless to do anything and the current options available to cities in regulating/licensing these facilities are relatively weak.

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

Occupancy Limitations and Homeowners Associations

Published on: July 24, 2015 | by Steven J. Tinnelly, Esq.

On January 20, 2015, a tragic fire ripped through a condominium complex in the city of San Juan Capistrano, killing three, injuring six, and displacing eighty residents living in eight units. The decedents were three of seventeen individuals living in a four-bedroom condominium. In light of the deaths and their relation to the number of occupants living in the unit, efforts are now underway to examine state and local occupancy restrictions with an eye towards preventing an incident like this from occurring in the future. To that end, questions have surfaced with respect to an association’s ability to adopt and enforce state and local occupancy standards, as well as to promulgate operating rules regulating the number of occupants living within a unit.

An association’s “operating rules” are regulations adopted by the board that apply “generally to the management and operation of the common interest development or the conduct of the business and affairs of the association.” (Civ. Code § 4340(a)) They relate to things such as the use of common area and separate interests, member discipline, and procedures for elections. (Civ. Code § 4355(a)(1)-(7)) In order to be valid and enforceable, the operating rule must meet several requirements: the rule must be (1) in writing, (2) within the authority of the Board of Directors conferred by law or the governing documents, (3) not in conflict with governing law and the governing documents, (4) adopted in good faith and in compliance with the procedural requirements set forth in Civil Code section 4360, and (5) reasonable. (Civ. Code § 4350) Accordingly, presuming that an occupancy rule is adopted by an association’s board of directors pursuant to the powers granted to it under the governing documents, the primary focus is whether the occupancy rule conflicts with governing law (i.e., California law).

Modifying Enforcement Policies; Avoiding Claims of ‘Selective Enforcement’

Published on: July 6, 2015 | by Steven J. Tinnelly, Esq.

hoa-pet-restriction One problem that arises in the context of enforcing homeowners association (“HOA”) governing documents pertains to how consistently certain use restrictions in the governing documents are enforced over time. For example, if a HOA has historically failed to enforce a particular restriction, a decision to enforce that restriction against a particular owner may subject the HOA to claims of “selective enforcement” and/or that the HOA’s enforcements efforts are being exercised in an arbitrary and capricious fashion. These claims not only hinder the cost-efficient resolution of disputes, but could significantly undermine the HOA’s enforcement authority.

It is therefore difficult for a HOA’s Board of Directors to modify the HOA’s enforcement policies over time, especially when it desires to enforce a use restriction that was either never enforced or enforced inconsistently by the HOA in the past. However, the recent unpublished opinion in The Villas in Whispering Palms v. Tempkin (Cal. App. 2015) 2015 WL 2395151 (“Villas”) demonstrates that this difficulty may be overcome through providing proper notice to the HOA’s members and through enforcing the restriction consistently thereafter…