HOA Governance

HOA Legislative & Case Law Update (2014) Now Available!

Published on: January 16, 2014 | by Steven J. Tinnelly, Esq.

hoa update 2014 Our “Annual Legislative & Case Law Update” newsletter for the year 2014 is now available in our library!

The Legislative & Case Law Update provides an overview of the new legislation and case law impacting California Homeowners Associations (“HOAs”) as we head into 2014. The new legislation includes, among other items, the re-organization of the Davis-Stirling Act (now in effect), and a bill that clarifies contractor licensing requirements for HOA managers. The new case law includes rulings that may impact HOA election rules, membership rights to attend Board meetings, use of HOA media outlets during election campaigns, insurance defense coverage, attorney’s fees recovery in HOA disputes, and assessment collection procedures.

Click here to read our Annual Legislative & Case Law Update (2014)

Have questions on any of the new legislation or case law? Click here to send us a question online.

Is There a ‘Model’ Set of HOA Rules & Regulations?

Published on: November 22, 2013 | by Steven J. Tinnelly, Esq.

rules and regulations california hoa assocaition.png *Asked & Answered

Asked – Are there recognized models of well-written rules and regulations for homeowners associations?

Answered – No, there are not, and the reason is because homeowners association (“HOA”) CC&Rs typically leave the drafting and amending of rules and regulations to the HOA’s Board of Directors. The types of rules and regulations (defined as “operating rules” under the Civil Code) that a HOA may adopt will depend on the language contained in the HOA’s governing documents as well as the unique characteristics of the common interest development. For example, the CC&Rs for condominium developments usually contain provisions explicitly addressing the Board’s ability (and in many cases, the Board’s obligation) to adopt a set of parking rules that regulate the HOA’s finite number of common area parking spaces. By contrast, CC&Rs for single family home projects may broadly state the Board’s ability to adopt rules governing the use of the HOA’s streets.

Here are the common issues that HOA Boards should address in drafting a good set of rules and regulations: common area rules, parking restrictions, noise and nuisance guidelines, trash can rules, pet restrictions, tenant rules, sign restrictions, pool and clubhouse hours, and the association’s disciplinary policy. Many of our clients also choose to include within their rules and regulations a restatement of some of the important restrictions contained in their HOA’s CC&Rs. This provides a valuable “quick reference guide” for residents who may not take the time to read through the entire set of the HOA’s CC&Rs.

The Board may also include a copy of the following policies that are provided to members in the Annual Policy Statement pursuant to Civil Code § 5310 as part of the “quick reference guide:” Architectural Guidelines and Application Procedures, Neighbor-to-Neighbor Dispute Policy, Alternative Dispute Resolution Procedures, Election Policy, and Assessment Collection Policy.

Rules and regulations are a valuable tool for resolving certain issues that are not explicitly addressed in a HOA’s CC&Rs. However, a Board must be aware of the limitations placed upon its rule-making authority under its HOA’s governing documents as well as the Civil Code. Therefore, where a Board’s authority to adopt or amend any particular rule or regulation is unclear, the Board should consult with the HOA’s legal counsel.

Blog post authored by Tinnelly Law Group attorney, Terri Morris.

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

Court Upholds Use of HOA Election Rules for Director Qualifications

Published on: October 28, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law

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

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

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

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

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

SB 752: Commercial & Industrial CID Act Signed into Law

Published on: October 11, 2013 | by Steven J. Tinnelly, Esq.

*New Legislation

Commercial and Industrial Common Interest Developments (“Commercial CIDs”) in California have historically been governed by the same provisions that apply to planned residential developments and condominiums: the Davis-Stirling Common Interest Development Act (“Davis-Stirling”). However, some of those provisions have resulted in unnecessary burdens and requirements for Commercial CIDs that were really tailored to provide consumer protections for homeowners in residential settings (i.e., open meeting, election and disclosure requirements).

In light of this issue, on September 6, 2013, the California Legislature passed SB752: the Commercial and Industrial Common Interest Development Act. SB752 mirrors many of the provisions contained in Davis-Stirling, but omits some of requirements that were geared toward residential homeowners. For example, SB752 contains provisions governing Commercial CID formation, governing documents, assessments and construction defect litigation, but omits certain Davis-Stirling provisions governing association elections and disclosure requirements.

SB752 was officially signed into law by Governor Brown on October 5, 2013 and will take effect January 1, 2014.

This is fortunate news for the Commercial CIDs that are becoming more prevalent within the community association industry. SB752 will help to simplify the management and operation of Commercial CIDs and will provide them with a workable framework that is better suited to address their unique needs.

Who is Entitled to Attend Board Meetings on an Owner’s Behalf?

Published on: September 3, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law hoa meeting

Membership rights with regard to the attendance and participation in Board meetings is an important component of the laws governing homeowners associations (“HOAs”). Civil Code Section 1363.05, known as the “Common Interest Development Open Meeting Act,” states that “any member of the [HOA] may attend meetings of the board of directions…” This right is central to keeping HOA members apprised of the issues affecting their community and the ways in which the Board is discharging its duties under the HOA’s governing documents.

However, one issue that surfaces from time to time deals with the extent to which a HOA is required to allow a member to attend a Board meeting with her attorney, or to allow the member’s attorney or agent to attend the Board meeting on the member’s behalf. This issue may be complicated further if the owner of a property (the “member” under the HOA’s governing documents) is an entity (i.e., a business organization or family trust).

Fortunately, the recent case of SB Liberty, LLC v. Isla Verde Association, Inc. (“SB Liberty”), will help resolve this issue and will provide valuable guidance for HOAs moving forward…

Equal Access to HOA Media Outlets During Election Campaigns

Published on: July 29, 2013 | by Steven J. Tinnelly, Esq.

*New Case Law

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

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

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

HOA Restrictions on Companion and Service Animals

Published on: May 29, 2013 | by Steven J. Tinnelly, Esq.

service animal hoa law accomodation attorneys disability.png *Asked & Answered

Asked – Our high-rise condominium association does not allow dogs weighing over 40 pounds, but we have an owner that has requested an exception for her “companion” dog that is a 70 pound Golden Retriever. Does our HOA have to allow the homeowner to have her companion dog?

Answered – Probably. The HOA may not discriminate against individuals with disabilities by prohibiting a “companion” animal or a “service” animal. The HOA’s weight restrictions for pets in the community does not apply to companion or service animals because they are not “pets.” Companion animals provide psychiatric support to individuals suffering from a mental disability such as depression, claustrophobia, certain types of autism, and other disorders that are mental in nature, while service animals assist with physical disabilities.

The Board must be careful to properly address the request for an accommodation due to a disability. If the homeowner can provide documentation of her diagnosed need for the animal, the Association must permit her to keep the animal in the community. The request should be handled quickly and with respect for the individual.

Handling requests for accommodation can be challenging. For more information on this topic, please visit our library and review our article titled “Responding to Requests for Accommodation.”

Content provided by TLG attorney Terri Morris

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

Electronic Balloting May be Coming to HOA Elections

Published on: April 2, 2013 | by Steven J. Tinnelly, Esq.

Under the Davis Stirling Act as currently written, common interest developments (“CIDs”) are required to comply with certain procedures for conducting elections. Among other requirements, the Act requires CIDs run by homeowners associations (“HOAs”) to adopt rules and appoint inspectors for the purpose of verifying signatures, counting and tabulating votes. Additionally, the votes themselves must be placed on secret paper ballots, using a specific procedure requiring the use of double envelopes.

Although the rules were intended to improve and standardize the manner in which HOA elections are conducted, they have also had the unfortunate consequence of making it more difficult to achieve quorum. As a result, HOAs are expending more resources, time and money in their attempts to hold an effective election.

In response to these difficulties, the California Legislature has introduced Assembly Bill 1360 (“AB 1360”) sponsored by the CAI California Legislative Action Committee (“CLAC”). In short, AB 1360 proposes to modify the rules to authorize HOAs to conduct elections and other votes of the membership by electronic means. Although paper ballots would still be utilized, the Bill would require Associations to provide their members with the option of voting electronically.

To be kept up to date on the progress of AB 1360, visit CLAC’s blog. If you have questions or concerns regarding your HOA’s voting procedures, or would like to know more about the potential impact of AB 1360, contact your HOA’s legal counsel.

Content by TLG attorney Kai MacDonald

Consequences for failing to distribute HOA annual budget?

Published on: March 8, 2013 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked: Are there any negative consequences or liability that can result from our Board’s failure to distribute the HOA’s annual budget?

Answered: Yes. California Civil Code Section 1365 requires a homeowners association (“HOA”) board of directors to prepare and distribute an annual pro forma operating budget to the HOA’s membership. Failure to comply with this requirement may hinder the board’s ability to take certain actions, such as increasing assessments or levying special assessments.

Under California Civil Code Section 1366, a HOA may increase annual assessments by twenty percent (20%), and impose special assessments of up to five percent (5%) of budgeted gross expenses, without the need to obtain membership approval. However, this power may only be exercised by the board if the annual budget required by Section 1365 has been distributed to the membership thirty (30) to ninety (90) days before the start of the fiscal year. Accordingly, where a HOA fails to comply with its financial disclosure obligations, regular assessment increases and special assessments will need to be submitted to the membership for approval. This will require the HOA to conduct a costly and potentially ineffective election and, should the membership fail to approve the assessment increase, the HOA may be forced to delay desperately needed repairs or forego other necessary services when needed.

The Civil Code’s various disclosure requirements can be difficult for any volunteer board to fully understand and satisfy. It is therefore important for HOAs to utilize the services of competent industry professionals, managers and financial planners to ensure that the interests of the HOA and the membership are not jeopardized as a result of statutory noncompliance.

Content provided by TLG attorney Kai MacDonald.

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

Legislative & Case Law Update (2013) Now Available!

Published on: January 7, 2013 | by Steven J. Tinnelly, Esq.

hoa laws Our annual “Legislative & Case Law Update” newsletter for the year 2013 is now available in our library!

The Legislative & Case Law Update provides an overview of the new legislation and case law impacting California Homeowners Associations (“HOAs”) as we head into 2013. The new legislation includes, among other items, bills that impact Bank foreclosures, the re-organization of the Davis-Stirling Act, EV Charging Stations and fees charged by HOAs in producing certain records. The new case law includes rulings that may impact the architectural restrictions placed on the installation of solar panels, arbitration provisions for construction defect disputes, “no-cost” HOA collections contracts, election disputes and defamation claims. The Legislative & Case Law Update also addresses some new Fannie Mae and FHA regulations impacting condominium insurance and certification requirements.

Click here to read our Legislative & Case Law Update (2013)

Have questions on any of the new legislation or case law? Click here to send us a question online.