HOA Governance

Board Member Qualifications: Defining “Ownership” for a Trust Beneficiary

Published on: May 9, 2011 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Question – One of our incumbent Board Members was recently discovered to be the beneficiary of a trust that holds title to her home. The title was transferred by Grant Deed to the named Trustee many years ago. The Board Member asserts that she is an owner and thus eligible to serve as a Board Member. Is she correct?

Maybe. Associations are permitted to set reasonable requirements/qualifications in their Bylaws or CC&Rs for members to serve on the Board. Laguna Royale v. Darger (1981). These requirements typically include that any member wishing to serve on the Board have an ownership interest in a property located within the Association. We typically treat the trustees as the owners of the property due to their ability to control title. However, general principles of trust law in California view trust beneficiaries as holding “the equitable estate or beneficial interest in” property held in a trust and are “regarded as the real owner[s] of [that] property.” Steinhart v. County of Los Angeles (2010).

The answer will ultimately depend on a number of factors including the nature of the restrictions/qualifications contained in your Association’s Governing Documents and the type of trust involved. We recommend discussing the issue with your Association’s legal counsel.

To submit questions to Tinnelly Law Group, click here.

Should your Association Permit the Installation of Cell Towers?

Published on: April 18, 2011 | by Steven J. Tinnelly, Esq.

A recent story in the Coast News highlights a situation faced by some HOAs: whether or not to permit the installation of cellular towers on Association property.

In Encinitas, a HOA Board is supporting a ballot measure that would grant Verizon a 20 year lease and allow a cellular tower to be placed on one of the Association’s greenbelts. The fees generated by the agreement would total $800,000 in new revenue for the HOA.

Regardless of the financial incentive, some of the HOA’s members fear that the cell tower would negatively impact their health and property values. Though the health-related argument is speculative, the members in opposition to the measure feel that maintaining property values is a legitimate concern.

To read the full story, click here.

Many of our HOA clients have permitted similar types of cellular installations on Association property without experiencing any negative impact on the community. A HOA Board should always take into consideration the views voiced by its membership when determining what is in the best interest of its community. However, HOA Boards and members should not discount how beneficial new revenue streams can be for an Association.

Complaining about your HOA is a Constitutionally Protected Activity

Published on: March 28, 2011 | by Steven J. Tinnelly, Esq.

A recently decided case underscores the fact that speaking out against the action of a HOA’s Board of Directors, agents and/or management is a constitutionally protected activity. In Country Side Villas Homeowners Association v. Susan Ivie, 193 Cal.App.4th 1110 (2011) (“Country Side“), a homeowner (“Ms. Ivie”) was upset at the Association’s newly elected Board and newly hired Attorney for their new interpretation of a maintenance provision in the CC&Rs concerning balconies. Ms. Ivie was concerned about the lack of funding for the new maintenance obligation and also that the decision was being made by the Board for self-serving reasons. The case ultimately went to trial where the Association sought a judicial determination as to the interpretation of the CC&Rs and also sought damages in the form of attorneys’ fees from Ms. Ivie.

The most interesting aspect of the holding is that the appellate court ultimately affirmed the trial court’s granting of Ms. Ivie’s anti-SLAPP motion. “SLAPPs” (“Strategic Lawsuits against Public Participation”) are civil complaints or counterclaims in which the alleged injury was the result of petitioning or free speech activities protected by the First Amendment of the US Constitution. California has an anti-SLAPP statute (Civil Procedure Section 425.16) that provides for a special motion to strike a complaint where the complaint arises from conduct that falls within the rights of petition and free speech.

The Problem of Suspended Homeowners Associations

Published on: March 18, 2011 | by Steven J. Tinnelly, Esq.

California Homeowners Associations (“HOAs”) primarily exist as California Nonprofit Mutual Benefit Corporations. We have recently encountered some instances where smaller and/or self-managed HOAs have failed to file and pay their state corporate taxes and/or make certain corporate filings. The unfortunate result for these HOAs is that their California corporate status is being suspended.

The exercise of corporate powers, rights and privileges may be suspended both under California Revenue and Taxation Code Section 23301 for a HOA’s failure to pay taxes and under California Corporations Code Section 5008.6 for the HOA’s failure to file certain corporate statements. Once a HOA is suspended, so too are its powers, rights and privileges which are outlined in its governing documents.

These powers, rights and privileges are essential to the effective management and functioning of its community. Should directors or agents of a suspended HOA even attempt to carry out the powers of the HOA during the period of its suspension, California Revenue and Taxation Code Section 19719 may punish them “by a fine of not less than $250 and not exceeding $1,000, or by imprisonment not exceeding one year.”

Email Addresses in Membership Records

Published on: December 21, 2010 | by Steven J. Tinnelly, Esq.

A 2010 court decision may compel an HOA to include member email addresses in satisfying a member’s demand to inspect membership records…