HOA Governance

Defining HOA “Membership” & “Ownership” Status for Registered Domestic Partners

Published on: June 14, 2011 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – Our Association’s By-laws state that you must be an owner of the Association to be eligible for election to the Board. Would the registered domestic partner of the person on title be considered an owner in the State of California under California Community Property Law?

Answered – Not in this instance. Most Association Governing Documents require that anyone wishing to serve on the Association’s Board of Directors be a “member” of the Association. Pursuant to California Civil Code Section 1358, “membership” within an Association is granted by virtue of a person’s ownership interest in the Association. Thus, so long as a person is an owner of a unit within the Association, they are granted membership rights.

Proof of one’s ownership interest in the Association is established through a deed which has been recorded in the Association’s County Recorder’s Office. The persons whose names are listed on the recorded deed are considered to be the “Owners of Record.”

Virtually every Association requires that a member be an “Owner of Record” in order to be eligible to serve on the Board of Directors. Therefore, a registered domestic partner who is not an “Owner of Record” would not satisfy this requirement. To resolve this issue, the domestic partner must be named on the recorded deed to the property. California Community Property law does not render spouses or domestic partners “Owners of Record” for such purposes if their names do not appear on the recorded deed.

To submit questions to Tinnelly Law Group, click here.

Can HOA Enforcement Actions Equate to Discrimination?

Published on: June 8, 2011 | by Steven J. Tinnelly, Esq.

The recent, unpublished opinion in Radell v. Park Wilshire Homeowners Association (2011) illustrates the importance of fully complying with prescribed HOA enforcement procedures. In Radell, the Plaintiffs alleged that the Willshire Bark Homeowners Association (“Association”) Board of Directors (“Board”) “committed a series of discriminatory acts intended to diminish the presence of Puerto Rican women in their upscale condominium building.”

The issue arose out of the Defendant’s use of their maid’s unit for residential purposes– a use which the Board felt constituted a violation of the Association’s CC&Rs. Rather than following the Association’s prescribed enforcement procedures, the Board declined to extend a confidential disciplinary hearing regarding the issue to the Defendants. The Board opted instead to publish the alleged violation to the entirety of the Association’s membership.

To make matters worse, the Board held an unnoticed, confidential Board meeting where they initiated a recall election against the Defendant Board Member. The Defendants then brought a housing discrimination action against the Association under the California Fair Employment and Housing Act (FEHA) and the Fair Housing Amendments Act of 1988 (FHA) by alleging that the Board “engaged in a pattern or practice of discrimination through disparate treatment on the basis of race, ancestry and national origin.”

Though the the holding in Radell primarily touches on Anti-Slapp motions in the context of housing discrimination, it also demonstrates how a Board’s conduct in enforcing CC&Rs can subject an Association to defending costly lawsuits. Boards must be diligent in fully complying with prescribed enforcement policies and procedures when dealing with each and every potential violation.

Credit Card Processing of HOA Assessments: Good Idea?

Published on: May 17, 2011 | by Steven J. Tinnelly, Esq.

Associations are required to levy regular and special assessments sufficient to perform their obligations under their governing documents and Ca. Civ. Code §1366(a). Associations may encounter difficulties in getting their members to pay assessments on a regular and timely basis. In response to these difficulties, some Associations are providing credit card processing of assessment payments as a courtesy to their members and/or an incentive for delinquent members to fulfill their assessment obligations while deferring the actual payment. The fees involved in processing assessments by credit card are then sometimes absorbed by the Association.

Several Managers and Board members have contacted us regarding the propriety of absorbing these fees.

We have prepared an article on this issue which is available for download from our Library. The article is entitled “Absorbing Credit Card Transaction Fees”.

In sum, absorbing these fees is problematic because (1) it results in an inequity for the Association’s members that pay their assessments by cash or check and (2) likely violates the assessment requirements of the Association’s CC&Rs. Associations that provide credit card processing of assessments should ensure that the members paying by credit card are responsible for any transaction fees and costs involved.

For a more detailed discussion of this issue, click here to read the article.

To submit questions to Tinnelly Law Group, click here.

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…