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Articles Posted in HOA Governance

*New Legislation

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On January 1, 2012, Section 1360.2 (now Section 4740) was added to the California Civil Code to limit a HOA’s authority to adopt and enforce certain rental “prohibitions.”  The legislative intent behind the law was the recognition that “the rights of Owners in [a HOA] to rent or lease their properties, as the rights existed at the time the Owners acquired them, should be protected by the State of California…”  Nevertheless, by its own terms, Section 4740 applies to rental prohibitions, not necessarily less serious restrictions that are reasonably related to the Association’s interests in maintaining and preserving the community.  Thus, many HOAs adopted restrictions regulating the rental of separate interests within the development (e.g., one-year minimum term limit, owner-occupancy requirements, individual room rental restrictions, etc.).

On September 28, 2020, Governor Gavin Newsom signed Assembly Bill 3182 (“AB 3182”), which was introduced as another measure “to address the housing and homelessness crisis” in California. According to Assembly Member Phil Ting (the author of AB 3182), “[t]here are millions of homes across the state that have the potential to be rented to Californians in need of housing but that are prohibited from being leased under outdated [HOA] rules.” While the stated objective of providing more affordable housing units is a laudable goal, AB 3182 significantly limits the extent to which HOAs may impose rental restrictions and prohibitions.

Under AB 3182, California Civil Code section 4741 is added to the Davis-Stirling Common Interest Development Act and renders void and unenforceable any provision in a governing document or amendment thereto “that prohibits, has the effect of prohibiting, or unreasonably restricts the rental or leasing of” a separate interest “to a renter, lessee, or tenant.” Despite this prohibition, Section 4741 does authorize a HOA to adopt and enforce:

  • A rental cap of twenty-five percent (25%) of the separate interests (or greater); and
  • A provision “that prohibits transient or short-term rental of a separate…interest for a period of 30 days or less.”

Moreover, Section 4741 adds that a separate interest (including Accessory Dwelling Units and Junior Accessory Dwelling Units) is not considered “occupied by a renter” if the separate interest is also owner-occupied. Thus, for example, a cap on the number of rentals within a HOA would not apply to an owner renting out individual rooms within his or her separate interest.

Other than the rental restrictions specifically identified in Section 4741, there is much uncertainty as to the extent to which other common rental restrictions would be rendered unenforceable as a result of AB 3182. Indeed, the Legislature provides no guidance as to what would constitute an “unreasonable restriction” on the rental of a separate interest. Therefore, each rental restriction contained in a HOA’s governing documents must be evaluated in light of AB 3182’s intent: to increase the number of housing units made available.

California HOA lawyers There is much uncertainty that remains concerning the extent to which other typical rental restrictions remain valid and enforceable. To the extent certain rental restrictions are rendered unenforceable by AB 3182, same must be removed from the governing documents no later than December 31, 2021. Failure to comply with Section 4741 may result in a HOA being liable for actual damages (e.g., lost rental income) and a civil penalty of up to one thousand dollars ($1,000). It is therefore important for each HOA to consult with their attorney to determine whether the HOA’s rental restrictions are enforceable in light of AB 3182, and to take action to amend their governing documents to remove such unenforceable provisions.

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

bigstock_Yard_Signs_At_Residential_Stre_229727968As we draw near to the 2020 election, many residents living in HOAs have decided to install yard signs and other displays for their chosen candidate or cause. Many of these “noncommercial” signs have sparked fury in those who oppose such views, calling upon the Board of Directors to have such signs removed. Thus, in recent months, we have received numerous requests from our clients to provide an opinion as to the extent to which a HOA may regulate the display of such non-commercial signs.

It is without doubt that we currently live in a society with varying opinions on political and social issues. Such division has only become more polarized with recent events.  While some might find the opinions espoused by certain groups repugnant, upholding a resident’s right to express those beliefs and opinions through the display of signs on their property is more important than the minor discomfort some may experience in observing such signs. The only other option would be to prohibit residents from displaying any signs concerning issues of politics and social justice, something which the California Legislature has expressly forbidden: “[H]omeowners throughout the state shall be able to engage in constitutionally protected free speech traditionally associated with private residential property” and “shall be specifically protected from unreasonable restrictions on this right in the governing documents.” (Historical and Statutory Notes, 8 West’s Ann. Civ. Code (2007 ed.) foll. 1353.6, p. 184.)

Indeed, under California Civil Code section 4710(a), “[t]he governing documents may not prohibit posting or displaying of noncommercial signs, posters, flags or banners on or in a member’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.” Some may nevertheless argue that certain noncommercial signs incite terror and/or rioting and therefore must be removed “for the protection of public health [and] safety.” Although such argument is speculative at best, Section 4710’s concern with public health and safety relates to concerns relative to the placement of such signs (e.g., view obstructions), not the fact that some might have an adverse emotional or physical reaction to such signs.

Inquiries have also been made concerning a HOA’s ability to restrict the number of noncommercial signs placed on a resident’s separate interest, as well as the duration of their display. Section 4710 does not address the number of noncommercial signs that may be displayed by a particular resident. However, in Fourth La Costa Condominium Owners Association v. Seith, the Court saw “no problem with allowing only one sign per unit,” and requiring that they be removed after a particular duration. ((2008) 159 Cal.App.4th 563, 581.) While Fourth La Costa pertained to real estate signs (i.e., commercial signs), the Court’s reasoning could similarly apply to restrictions on the number of noncommercial signs as well as the duration of display. (See id. at p. 581 (upholding the HOA’s decision “for aesthetic purposes”).) A HOA’s ability to regulate the number and duration would be further supported if the city/county in which the HOA is located has also promulgated codes/ordinances regulating the installation of political signs on a resident’s separate interest.

Again, it is important to recognize that many residents might find some of the political and social views promoted by their neighbors as offensive. Because they live in a HOA, they must necessarily tolerate differing viewpoints and loyalties. As the California Supreme Court has said, “[t]he very existence of organized society depends upon the principle of ‘give and take, live and let live’….” (San Diego Gas & Electric Co. v. Superior Court. (1996) 13 Cal.4th 893, 937-38.) Therefore, in response to resident complaints, such residents should be informed of the limitation imposed by Section 4710 and directed to “avoid further bombardment of their sensibilities simply by averting their eyes.” (Cohen v. California (1971) 403 U.S. 15, 21.)

California HOA lawyers Residents who object to the content displayed on noncommercial signs should be reminded that HOAs are limited in the ways in which they may restrict residents from displaying such signs on their separate interests. Nevertheless, HOAs should consult with their general counsel to ensure that the HOA’s operating rules are in compliance with California Civil Code section 4710.

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

Medical-Necessity-Criteria-1080x675-1Community associations buy insurance to obtain coverage in the case it becomes necessary.   The reality is pre-litigation costs are expensive, ranging anywhere from a few thousand to tens of thousands of dollars.  Litigation itself can be even more and this is not including any estimated fees for an appeal.  No association wants to pay out of pocket for all these fees when there is a perfectly good insurance policy bought just for these types of situations.  However, sometimes, an insurance company will want to cut corners to avoid paying out its policy coverage amount.  If an association’s insurance carrier(s) denies coverage, your association’s legal counsel will work together with the insurance adjuster to persuade the insurance carrier to provide coverage, as a bad faith insurance claim would not be beneficial to either parties.

What is a bad faith insurance claim?

The law implies a covenant of good faith and fair dealing in every contract, including insurance policies. (Wilson v. 21st Century Ins. Co. (2007) 42 Cal. 4th 713, 720).    “[T]he essence of the implied covenant of good faith and fair dealing is that [t]he insurer must refrain from doing anything that will injure the right of the insured to receive the benefits of the [insurance] agreement, the terms and conditions of which define the duties and performance to which the insured is entitled.” (Brandwein v. Butler (2013) 218 Cal.App.4th 1485, 1514- 1515.)  Therefore, breach of a specific provision of the insurance contract is not a necessary prerequisite to bringing a bad faith claim. (Carson v. Mercury Ins. Co. (2012) 210 Cal.App.4th 409, 429.)

The implied covenant of good faith and fair dealing is breached where an insurer delays or denies payment of policy benefits unreasonably (i.e., without any reasonable basis for its position) or without proper cause. (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1072-1073; see Wilson, supra, 42 Cal. 4th 713, 723, —“[A]n insurer’s denial of or delay in paying benefits gives rise to tort damages only if the insured shows the denial or delay was unreasonable”; see also Chateau Chamberay Homeowners Ass’n v. Associated Int’l Ins. Co. (2001) 90 Cal.App.4th 335, 346.)

“[F]or a variety of [public] policy reasons, courts have held that breach of the implied covenant (in insurance cases) will provide the basis for an action in tort.” (Foley v. Interactive Data Corp (1988) 47 Cal. 3d 654, 684, 765 P.2d 373.)  Insurance companies know that people buy insurance to obtain peace of mind and security, and that they expect to be paid promptly in the event of loss.  (Egan v. Mut. of Omaha Ins. Co. (1979) 24 Cal. 3d 809, 819, 620 P.2d 141, 145.)  Having sold insurance on this basis, insurers are not permitted to put their interest (in avoiding claims losses) ahead of the insureds’ interests in obtaining the protection for which they bargained. (Id. at p. 819.

California HOA lawyers If the association timely notifies the insurance carrier upon learning of a potential claim that may be covered by their insurance policy, insurance companies must cooperate in the investigation or settlement of the claim or defense against the lawsuit among other things.

-Blog post authored by TLG Attorney, Vivian X. Tran, Esq.

Expect-the-UnexpectedIf 2020 has taught us anything, it is to expect the unexpected. California community associations base their successful and continuing operations on careful planning and budgeting, but Associations must also plan for the unexpected. To that end, association vendor contracts should be drafted to ensure they afford adequate protections for when peril strikes.

Community associations regularly contract with vendors for a variety of services including landscaping and the maintenance and repair of common area components. Vendor contracts are often woefully sparse and fail to contain language to provide the parties with a mechanism to deal with unexpected disasters like war, fire, terrorist acts, or even pandemics like COVID-19.

Force majeure is a Latin phrase that means “superior force.” A force majeure contractual clause defines a set of events or circumstances beyond the contracting parties’ control that may excuse or delay parties’ contractual obligations for performance because performance would either be too difficult, impossible, or impracticable. Without it, the parties are bound to perform even in the face of a deadly viral pandemic which has resulted in shelter-in-place orders and business shutdowns across the state.

Citing Witkin Summary of Law, California courts have specifically held that “force majeure is the equivalent of the common law contract defense of impossibility and/or frustration of purpose: performance of a contract is excused when an (1) unforeseeable event, (2) outside of the parties’ control, (3) renders performance impossible or impractical.” Citizens of Humanity, LLC v. Caitac Int’l, Inc., No. B215233, 2010 WL 3007771 (Cal. Ct. App. Aug. 2, 2010). (emphasis added). In the realm of community association vendor contracts, COVID-19 has made the performance of certain contractual obligations impossible or impracticable. A large non-emergency construction project like a balcony repair which requires access by strangers to the inside of owners’ units comes to mind.

Very few vendor contracts which have not been prepared or negotiated by an attorney contain force majeure clauses. While it is always advisable for Associations to have vendor contracts reviewed by counsel, COVID-19 is an additional reason to seek the advice of counsel before signing a vendor contract. Given that a pandemic and shutdown of this magnitude is, forever more, a foreseeable event, its description should be included in all force majeure contractual provisions moving forward, so as to erase any doubt as to what events constitute the triggering of a force majeure event.

Not all force majeure clauses are created equal. Boilerplate language has been held insufficient in California and other states—a good example being Watson Labs, Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp.2d 1099, 1111 (C.D. Cal. 2001), where language referring to “regulatory, governmental … action” was found to be too vague and boilerplate to reflect that the parties considered that the shutdown of the Defendant’s plant would be encompassed.

Accordingly, an approach of over-inclusiveness should be adopted in drafting force majeure clauses. This ensures that not just a pandemic, but the effects of a pandemic, such as shelter-in-place orders, quarantines, government shutdowns, and other economic ripples caused by the response to an epidemic or pandemic be included in the definition of a force majeure event.

California HOA lawyers Associations should have all contracts reviewed by counsel and vendor contracts should contain a well-drafted force majeure clause to afford associations protection from liability in the event a pandemic or other force majeure event requires the delay or termination of a contract.

-Blog post authored by TLG Attorney, Carrie N. Heieck, Esq.

hoa-gym-closure

California homeowners associations started reopening community gyms when the State of California began easing restrictions imposed by the initial COVID-19 stay-home orders from March 2020 according to stages of a reopening roadmap. Thereafter, COVID-19 cases across the state began to spike, causing the state to issue renewed restrictions as set forth in the July 13, 2020 Statewide Public Health Officer Order (“Order”). These renewed restrictions forced HOAs in counties on the Monitoring List, including Orange, San Diego, Placer & Santa Cruz counties, to close previously-reopened gyms and fitness centers unless they could safely operate outdoors.

Due to reduced cases and otherwise meeting the requirements for slowing the spread of COVID-19, Orange, San Diego, Placer and Santa Cruz counties were recently removed from the state’s Monitoring List. However, the removal does not mean that community gyms and fitness centers may reopen at this time. This is because Section 3 of the Order provides that counties placed on the Monitoring List must close indoor gym and fitness center operations, but does not provide for the reopening of those indoor operations once a county is removed from the Monitoring List. For that to happen, the state must modify the Order and authorize the re-opening of indoor fitness facilities. Applicable county orders must also be similarly updated.

For now, the state’s COVID-19 website clearly states, “[c]ounties on, or recently removed from, the County Monitoring List must close indoor operations for the following business sectors, events, and activities . . . Gyms and fitness centers . . .”  This means that outdoor fitness facilities are the only option for HOAs in counties on or recently removed from the Monitoring List. However, caution should be exercised (no pun intended) before moving community gyms outside as the equipment could easily be stolen, damaged due to exposure from the elements, cause costly damage to the HOA common area while being moved, or injure workers or volunteers whom are not otherwise qualified to move heavy equipment. Moreover, gym equipment left outside and unattended could increase the HOA’s liability exposure due to, for example, those improperly using it for play or climbing.

California HOA lawyers While this state of events may be disappointing for homeowners, continued reduction of COVID-19 cases across the state should encourage state officials to reopen indoor fitness facilities when reopening can be accomplished safely.  Homeowners associations are encouraged to consult with their legal counsel before reopening their fitness facilities to ensure compliance with all applicable laws.

-Blog post authored by TLG Attorney, Carrie N. Heieck, Esq.

*Asked & Answered

Contract-ReviewAsked Our HOA community manager always recommends that our vendor contracts be reviewed by our HOA attorneys before we sign them. Is this really necessary?

Answered – Yes! Contract review is an integral step to protect the HOA against future contract disputes. Oftentimes, HOA Boards of Directors don’t think twice about a contract until there is a dispute with the other party later on. By this point, it’s too late to negotiate contract terms, and the Board is often left to interpret and navigate poorly written and single-sided provisions that do not provide any support or protection to the HOA.

Contract disputes can be extremely costly and time-consuming. Since contract disputes and related expenses are unpredictable, they aren’t necessarily incorporated into the HOA’s annual budget; this can put a lot of financial strain on the HOA and could lead to special assessments on the membership to cover the costs. Furthermore, contract disputes can leave the HOA tied up with a vendor in which they’d rather part ways. This could leave the HOA without the ability to hire a new, better-qualified vendor to perform the job at hand.

Our HOA attorneys are skilled in the review, revision, and negotiation of contracts specific to HOA needs. Our attorneys can spot concerns that may not be obvious to a Board member, recommend alternative or additional language to provide HOA specific protections, and also communicate these concerns directly with the vendor. Additionally, our attorneys can identify whether the Board may be prohibited from entering the contract pursuant to the HOA’s governing documents. Combined, these efforts will result in a more comprehensive contract and more balanced protections for the HOA.

California HOA lawyers By taking the time up front to work with our expert attorneys, Board members can be assured that they are prudently adhering to their fiduciary duties and feel confident that they have taken appropriate measures to mitigate costly and time-consuming contract disputes in the future.

-Blog post authored by TLG Attorney, Joelle M. Bartkins, Esq.

Support-animal-1*Asked & Answered

Asked Our Association does not allow pets in the pool area, but a resident has recently begun bringing her emotional support dog to the pool-side lounge area. Do we have to let the dog accompany its owner to the pool?

Answered – Probably. The Federal Fair Housing Act requires housing providers to make reasonable accommodations that may be necessary to allow persons with disabilities to enjoy their housing, including common area spaces. An accommodation is typically considered reasonable if it does not impose an undue financial and administrative burden on the housing provider or fundamentally alter the nature of the provider’s operation. Normally, allowing an emotional support dog to use a common area that is otherwise off limits to pets will not create such a burden on the homeowners association (“HOA”).

In this case, since the HOA’s restriction on pets from the pool area may be serving as a barrier to prevent this resident from using the pool area, making an exception to this rule and allowing her to bring her emotional support dog to the pool deck is likely a reasonable accommodation that the HOA can make.

However, like other dogs within the Association, an emotional support dog must remain under the control of its owner. This means the HOA can require that the dog remain on a leash while it is poolside with its owner unless a specific accommodation to allow the dog off-leash is requested by the dog’s owner and granted by the HOA – there are very limited circumstances when a dog does not have to be leashed or crated. Furthermore, if the dog causes a nuisance (for example, uncontrolled barking) or poses a threat of harm to another person or the property of another person, the HOA can restrict the dog’s presence in order to eliminate the nuisance or threat to other residents of the HOA.

It is worth noting, however, that just because the emotional support dog is allowed in the pool area does not mean the dog may enter the pool. Public health regulations prohibit dogs in swimming pools, and the HOA may not ignore this regulation to allow the dog inside the pool with its owner. If the owner is in the pool, the dog must continue to remain under control, whether the dog’s leash is held by another person capable of controlling the dog or tethered to a stable element.

California HOA lawyers When an HOA receives a request from a resident for an accommodation based on the resident’s disability, the Board should address the request timely and maintain an open dialogue with the resident. The Board should be careful to address these requests in compliance with all applicable laws and should not ask about the nature or extent of the person’s disability. Oftentimes in a request regarding an emotional support animal, the person’s disability and the animal’s related service task is not readily apparent (as may be the case for a dog that helps guide an individual in a wheelchair). HOA’s should consult their legal counsel regarding requests for accommodation of disabled residents.

-Blog post authored by TLG Attorney, Joelle M. Bartkins, Esq.

hoa-member-information*Asked & Answered

Asked – Our HOA Board of Directors just learned that any member may request a copy of our HOA’s membership list and have access to other members’ personal contact information. Is there anything we can do to protect the privacy of our members who may not want their personal information shared with others in our community?

AnsweredYes. California law does allow any member of your HOA to inspect and copy specified “association records,” which include your HOA’s membership list.  The membership list contains member names, property addresses, and mailing addresses. Moreover, due to recently enacted legislation, the membership list now includes member email addresses as well. (Civ. Code section 5200(a)(9).)

This raises several privacy concerns. Members making a request for the membership list could ultimately give or sell the list of addresses to soliciting vendors, or use the contact information contained in the membership list for other improper purposes. To prevent this result, our HOA lawyers encourage our clients to become familiar with Civil Code section 5220. This provision allows a HOA member to submit a written request to be removed from (to “opt-out” of) the membership list in order to prevent the disclosure of their private contact information to other members. This opt-out remains in effect until changed/revoked by the member.

California HOA lawyers We recommend that HOAs adopt privacy policies and opt-out forms to help protect their members’ private contact information.
**An example HOA privacy policy and opt-out form is available for download on our website at: tinnellylaw.com/opt-out.pdf.

AR-703289967-e1585596723226*Unpublished Opinion

Volunteer officers and directors of a common interest development (“HOA”) are required to make decisions which often have significant legal and financial implications for the HOA and its membership. Because they are unpaid volunteers, officers and directors are afforded certain protections against personal liability similar to those afforded to directors and officers of other types of nonprofit corporations. Those protections are necessary in order to secure members willing to serve a HOA’s board:

The Legislature finds and declares that the services of directors and officers of nonprofit corporations who serve without compensation are critical to the efficient conduct and management of the public service and charitable affairs of the people of California. The willingness of volunteers to offer their services has been deterred by the perception that their personal assets are at risk for these activities…It is the public policy of this state to provide incentive and protection to the individuals who perform these important functions.

(Corp. Code § 5047.5(a).)

One of the liability protections afforded to a corporation’s directors include a legal doctrine known as the “Business Judgment Rule,” or, in the context of HOAs, the “Rule of Judicial Deference.” (See Lamden v. La Jolla Shores Clubdominium HOA (1999) 21 Cal.4th 249.)  The Rule of Judicial Deference generally requires courts to defer to maintenance decisions made by HOA boards even if a reasonable person would have acted differently in the same situation:

Where a…board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority…to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.

(Id. at p. 253.) Such deference is premised upon “the relative competence, over that of courts, possessed by owners and directors of [HOAs] to make the detailed and peculiar economic decisions necessary in the maintenance of those developments.” (Id. at pp. 270-71.)

Accordingly, so long as the board acts in accordance with its duties, in good faith, and in a manner it believes to be in the best interests of the HOA and its members, its decision will generally be upheld. (Id., at p. 265; Dolan-King v. Rancho Santa Fe Assn. (2000) 81 Cal. App. 4th 965, 979.) Courts commonly afford boards with the presumption in favor of their actions being taken in good faith. (Beehan v. Lido Isle Community Assn. (1977) 70 Cal. App. 3d 858, 865 (“Every presumption is in favor of the good faith of the directors. Interference with such discretion is not warranted in doubtful cases.”).)

Nevertheless, the Rule of Judicial Deference does not necessarily extend to every action (or decision not to act) that the board may take. Notably, the rule set forth in Lamden was tied solely to board decisions concerning “ordinary maintenance.” (See Lamden, 21 Cal.4th at p. 260 (“The precise question presented…is whether we should…adopt for California courts a…rule-of judicial deference…that would apply…to…ordinary maintenance decisions entrusted to the discretion of their [HOAs’] boards of directors.”).) It does not create comprehensive protection for every decision and action of a HOA; rather, such “deference applies only when a homeowner sues a [HOA] over a maintenance decision that meets the enumerated criteria.” (Affan v. Portofino Cove HOA (2010) 189 Cal.App.4th 930, 940.)

Despite the Court’s reference to the “narrow scope of the Lamden rule,” the Rule of Judicial Deference is still being expanded despite the Affan holding. For example, in the recent unpublished case of Jongerius v. Sun Lakes Country Club Homeowners Ass’n (2019) Cal. App. Unpub. LEXIS 7316 (“Jongerius”), the California Court of Appeal touched on the Affan holding, as well as other holdings applying the Lamden rule, when rejecting the homeowners’ argument that the scope of the Lamden rule is limited to decisions that relate to damaged common area and not to private property.

In Jongerius, the HOA became aware of a soil subsidence issue impacting several lots abutting a common area slope and damaging the common area wall separating the two. In response, the HOA retained a civil engineer (“First Expert”) “‘to investigate and provide independent expert analysis regarding the nature, extent, and cause of the slope subsidence occurring adjacent to the lots’ owned by plaintiffs.” (Id. at p. *4.) Between 2006 and 2010, the First Expert found no evidence of slope instability but noted “very small” movement as a result of soil settling. The Expert indicated that “[a] perfect repair procedure would be to install a caisson-supported wall and grade beam system at the top of slope,” but that such a repair would not be reasonable under the circumstances given the costly and disruptive nature of the repair. (Id. at p. *5 (internal quotations omitted).)

In 2011, and after settling with the developer on the soil subsidence issue, the HOA hired a second engineer (“Second Expert”) “to conduct another site inspection and to prepare repair recommendations that would alleviate the damage the slope creep was causing to the rear common wall running along the subject slope.”  The Second Expert disagreed with the First Expert in terms of repairs, opining “that the most appropriate means of repair for the walls is to fill the separations with non-shrinking grout, cosmetically patch, texture coat, and paint the walls every few years.” (Id. at p. *6 (internal quotations omitted).) In light of the $4 million cost of installing a caisson-supported wall, the Board unanimously approved the Second Expert’s recommendation of frequent cosmetic repairs.

Sometime thereafter, certain homeowners abutting the common area slope brought a lawsuit against the HOA claiming that the HOA had negligently maintained the common area slope pursuant to the HOA’s CC&Rs which had resulted in damage to the homeowners’ property. (Id. at p. *9.) The trial court granted the HOA’s motion for summary judgment, finding that the Rule of Judicial Deference barred the homeowners’ claims. (Id.) The Court of Appeal affirmed.

Homeowners’ contended that the Lamden case limited the extent to which the Rule of Judicial Deference applied in maintenance-decision cases. In particular, the homeowners argued that the Lamden rule “only applies in narrow circumstances involving damage to common areas, not to private properties” owned by other parties. (Id. at p. 15) In other words, “judicial deference is only given to HOA decisions that affect common areas, not private properties owned by third parties.” (Id.) The Court rejected this argument, concluding that “the Lamden court never distinguished personal or separate property from common area property.” (Id.) Indeed, in Lamden itself, the court applied the Rule of Judicial Deference notwithstanding the plaintiff’s alleged diminution in property values as a result of the HOA’s maintenance decision. (Id. at p. 16.) Moreover, in Affan, the court refused to apply the Rule of Judicial Deference not because of the distinction between common area and private property, but rather because of the HOA’s complete and utter failure to remedy a known common area maintenance issue. (Id.)

Accordingly, the Jongerius court concluded that the Rule of Judicial Deference applies to common area maintenance decisions notwithstanding the fact that those decisions may negatively impact the private property of others. Nevertheless, in order for the Lamden rule to apply the HOA must demonstrate that its decision was made upon reasonable investigation, in good faith and in the best interest of the HOA and its members. In Jongerius, the HOA met that burden.

California HOA lawyers This case is important because it highlights the fact that the Rule of Judicial Deference may apply in situations where common area maintenance decisions cause damage to property owned by third parties. However, the HOA must still demonstrate that the decision was made upon reasonable investigation, and in good faith and in the best interest of the HOA. Therefore, it is important for HOAs to get experts involved when considering issues impacting common area maintenance.

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

CondoAmenitiesCommunity associations across the state are wrestling with the idea of opening common area facilities after closure due to COVID-19.  Residents are becoming increasingly restless under the state’s stay-at-home order; naturally, they desire to use their community association’s recreational amenities (“Amenities”).

“When can we use the pool?  When will the gym be opened?”  Boards must balance resident pressures with their fiduciary obligation to do what’s best for their communities.

The purpose of this blog post is to identify a two-part test that can help boards and community managers evaluate when to re-open the Amenities and, if so, under what circumstances: (1) Can the Amenities be opened? (2) Should the Amenities be opened?  The information provided herein is current as of Tuesday, May 12, 2020.

Can the Amenities be opened?

Community Associations Institute (CAI), a worldwide industry trade group for community associations, recommends that community associations comply with governmental regulations regarding COVID-19.  Therefore, the first question to be asked is whether it is legally permissible to re-open Amenities in view of the government’s current stay-at-home orders.  The answer to that question depends upon state and local declarations regarding recreational use.

Federal and state authorities do not appear to have provided guidance with respect to the closure and re-opening of HOA facilities in view of COVID-19.  Understanding how the government is managing similar recreational facilities in the public arena (e.g. pools; parks; gyms; and community centers, etc.) can offer a blueprint for California HOAs.

California Governor Newsom (“Newsom”) is opening California through a four (4) stage Resilience Roadmap.  As of the date of this correspondence (May 12, 2020), it appears that the state is slowly moving into Stage 2 of that Roadmap (Lower-risk workplaces).  According to the state’s web site (covid19.ca.gov/roadmap/), gyms and fitness studios, community centers, public pools, playgrounds and picnic areas are categorized as “Higher-risk workplaces” which are NOT in Stage 1 or 2.  It seems that the state has not yet adopted guidelines with respect to the safe operation of those areas.

Newsom states that county officials and localities can decide to move more quickly (or slowly) into Stage 2 of reopening than the statewide baseline.  It is possible that county and local governments could potentially open gyms, pools and community facilities after adopting their own safety guidelines.  Under that circumstance, it would be safer for community associations to open their similar private facilities because operating procedures can mirror available public health standards.  If government orders are not clear or are silent with respect to the extent of lock down orders in your region, then Amenity opening could be premature – and to some degree risky.   You can imagine the first question at a deposition in a personal injury lawsuit against the association: “Why did the association open the pool when your county was still under lockdown?”

Should the Amenities be opened?

Presuming Amenities can be opened because of the absence of applicable stay-at-home orders, the next question becomes: Is opening the Amenities the right decision for your community at this time?  Are we able to comply with governmental regulations?  If so, how can we keep our facilities safe?  Those questions should be asked before Amenities are opened.

A primary consideration should be whether the association’s liability policies cover COVID-19 liability claims (i.e. a resident alleges that he or she became infected because of the Association’s improper disinfection efforts).  Industry insurance professionals have noted that association liability insurance policies may include a coverage exclusion for bacteria and viruses, such as COVID-19.  Under that circumstance, the association could be directly liable for personal injuries because the risk of such damage has not shifted to the insurance carrier.  It is recommended that boards discuss application of that policy exclusion with the association’s insurance professional.

Before re-opening the Amenities, boards should develop a risk mitigation safety plan (“Safety Plan”), in accordance with CDC guidance and state/local regulations.  That plan can be previewed with the association’s legal counsel (for purposes of legal compliance) and management (for purposes of managing logistics and enforcement).  Industry experts believe that additional cleaning and enforcement efforts could create unforeseen expenses – up to as much as 25% of an existing Association budget.  Management can be an excellent source to identify cost-savings measures, such as limiting resident use of Amenities and their hours of operation.

Discussing how to manage resident communication is critical as boards decide whether to re-open Amenities.  Regular updates in some form are desirable for purposes of education and transparency.  Use of a waiver agreement should be considered for purposes of acquiring their appreciation of the risk associated with Amenity use.  It is important for residents to know that the association cannot guarantee that no one will get sick or that the premises are COVID-19 free.  In that regard, disclaimer signs should be posted throughout the Amenities which state something like, “The Association is not ensuring that the [insert name of Amenity] is free of COVID 19 contaminants.”

Is Amenity re-opening the right decision for your community at this time?  Factors which may be relevant for a neighboring community may not be relevant to your association, even though both developments exist within the same city.  Compared to your neighbor, your community may have more or less Amenities, may or may not have the same capacity to comply with governmental safety mandates, and will likely have a different budget for purposes of maintaining a safe environment and enforcing the Safety Plan.

California HOA lawyers The understandable desire to re-open common area facilities should be balanced by prudent business practices.  Understanding risk and the government’s safety guidelines are essential for purposes of making informed decisions.  Fortunately, there are many sources of information in that regard.  Boards of Directors and management professionals are strongly encouraged to consult with the association’s vendors and consultants during the decision-making process.

-Blog post authored by TLG Attorney, Kumar S. Raja, Esq.

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