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Articles Posted in HOA Governance

The Rule of Judicial Deference: Protecting HOA Decisions Based on Reasonable Investigation and Made in Good Faith.

Published on: May 19, 2020 | by Steven J. Tinnelly, Esq.

*Unpublished Opinion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.

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.

Thinking about when to open Common Area Amenities? A Blue-Print to a Successful Re-opening

Published on: May 12, 2020 | by Steven J. Tinnelly, Esq.

CondoAmenities Community 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.

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.

How Quickly Must HOAs Bring Suit Against Homeowners for Violations of the Governing Documents?

Published on: April 28, 2020 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked– Is the Board of Directors required to bring legal action, within a certain timeframe, against a homeowner, who is violating the association’s governing documents?

Answered – In most circumstances, the association has five (5) years to bring legal action against violating homeowners pursuant to the Statute of Limitations. (See Code Civ. Proc., § 336(b).) The Statute of Limitations begins to run from the time the board discovers the violations or, through exercise of reasonable diligence, should have discovered the violations. Determining when the Statute of Limitations begins to run is a fact intensive inquiry, which must be evaluated on a case-by-case basis.

The five-year Statute of Limitations tolls (or is extended) in two limited circumstances. The Statute of Limitations will toll for a period of thirty (30) days after a party (either the HOA or a homeowner) offers Alternative Dispute Resolution (“ADR”). (Civ. Code, § 5945(a).) The Statute of Limitations will later toll for a period of ninety (90) days after one party accepts ADR, so that mediation can take place. (Civ. Code, § 5945(b).) This tolling period will also include any extensions agreed to, in writing, by the parties. (Civ. Code, § 5945(b).)

HOAs should keep in mind that even if the Statute of Limitations has not yet expired, the Court has the authority to prohibit an HOA from initiating legal action if it believes that the HOA failed to promptly enforce the governing documents. These legal defenses are known as the defense of “laches” and “waiver.” The defense of laches requires a homeowner to prove that he was prejudiced by the HOA’s unreasonable delay in enforcing the governing documents. Whereas, the defense of waiver requires a homeowner to prove that the HOA failed to promptly remedy a sufficient number of similar violations throughout the community, so that the HOA’s related rules and regulations generally appeared to be waived. The theory is that by failing to enforce some violations, the HOA induced other similarly situated homeowners to believe the association’s governing documents were no longer subject to enforcement.

To avoid these potential defenses, HOAs should act promptly to enforce the governing documents upon learning of a violation. Although, it is important to note, that HOAs are not required to initiate litigation for every potential violation. HOAs can, alternatively, enforce their governing documents without legal action via monetary penalties and/or the suspension of privileges.

When the board of directors discovers a violation, or is notified of the same, it should promptly investigate the matter to determine the best course of action to compel the homeowner’s compliance. Before resorting to litigation, HOAs should always weigh the costs of litigation, the seriousness of the violation, and the likelihood of success at trial. The board of directors possesses wide discretion to determine whether or not to move forward with litigation, so long as the board is acting in good faith and in the best interests of the association. In the case of Beehan v. Lido Isle Community Association, the Court of Appeal held:

“The power to manage the affairs of a corporation is vested in the board of directors. Where a board of directors, in refusing to commence an action to redress an alleged wrong against a corporation, acts in good faith within the scope of its discretionary power and reasonably believes its refusal to commence the action is good business judgment in the best interest of the corporation, a [Member] is not authorized to interfere with such discretion by commencing the action…. ‘Every presumption is in favor of the good faith of the directors. Interference with such discretion is not warranted in doubtful cases.” (Beehan v. Lido Isle Community Association (1977) 70 Cal.App.3d 858, 865.)

If an HOA is uncertain as to whether the Statute of Limitations has expired for an outstanding homeowner violation, the board of directors should consult with its legal counsel to determine whether the HOA has the ability to remedy the outstanding violation through legal action, or to address such violation through alternative means.

-Blog post authored by TLG Attorney, Sarah A. Kyriakedes, Esq.

Can an Association Prohibit Smoking Inside the Units?

Published on: April 7, 2020 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – Can a homeowners’ association prohibit owners from smoking within the interior of their units?

Answered – The California Legislature has recognized that homeowners associations (“HOAs”) require flexibility in adopting and enforcing “operating rules” governing the use of common areas and “exclusive use” common areas (or “Restricted Common Areas”) such as parking spaces, patios and balconies. The California Civil Code provides this flexibility by granting HOAs authority to adopt and enforce such operating rules without requiring a formal amendment to the HOA’s Declaration of Covenants, Conditions and Restrictions (“CC&Rs”). (See Cal. Civ. Code § 4350.)

However, a HOA’s authority to adopt operating rules is not absolute. For an operating rule to be valid and enforceable it must satisfy various requirements. One of those requirements is that the operating rule must be “within the authority of the board conferred by law or by the declaration.” (Cal. Civ. Code § 4350(b).) In other words, for the board of directors (“board”) to implement rules regulating conduct within the units, either the CC&Rs or prevailing law must confer upon the board the authority to implement such rules.

Most CC&Rs provide that the board’s rule-making authority extends to activities affecting “the Common Area and the facilities thereon.” Such a provision therefore does not authorize the board to promulgate new operating rules regulating conduct inside the units. Notwithstanding that fact, many CC&Rs also contain a use restriction prohibiting residents from engaging in activities within their units which would constitute a “nuisance.” Indeed, such a provision may read something like:

A Member in Our Community Tested Positive for COVID-19 – What Do We Do?

Published on: March 25, 2020 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked –We just found out that two homeowners in a community we manage are infected with COVID-19 and they are currently self-isolating in their Units. What must be done on our end and what information can we disclose to help prevent the spread?

Answered – Even if there is not a known case of COVID-19 in the community, Associations should be taking the pandemic seriously. This includes implementing full compliance with Governor Newsom’s Executive Order (“Order”), the Department of Homeland Security’s Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response referenced in the Order, and the California Department of Public Health (“CDPH”) Guidelines (“Guidelines”). In short, the Executive Order mandates that everyone is required to stay home except to get food, care for a relative or friend, obtain necessary health care, or to perform an essential job. And, if one must leave their home, they must keep at least 6 feet of distance from others. Aside from the stay-home mandate, the Guidelines encourage people to wash their hands with soap and water for at least 20 seconds, to cover coughs and sneezes with a tissue, to clean and disinfect frequently-touched objects and surfaces, and, if soap and water are not available, to use alcohol-based sanitizer.

In response to the Order and Guidelines, Associations should be temporarily closing community recreational facilities, allowing staff and contractors (including management) to work from home where possible, implementing enhanced cleaning of any on-site facilities, postponing annual elections and Board meetings or working with counsel to determine how meetings may proceed virtually to comply with the Executive Order as well as the Davis-Stirling Act, and encouraging members to stay home and to use proper hygiene to avoid the spread of the virus.

If the Association is aware of a resident in the community infected with COVID-19, proper disclosures to the membership apprising them of the situation are recommended for heightened awareness with the goal of reducing the transmission of the virus between residents in the community.

Boards have a fiduciary duty to act in the best interests of their communities. Additionally, the Articles of Incorporation for many Associations state a corporate purpose of promoting the health, safety and welfare of the members. To that end, it is recommended that Associations disclose to members that resident(s) in the community have recently tested positive for COVID-19 and are in self-isolation. To protect the privacy of the infected members, names, addresses, and other identifying information should not be disclosed under any circumstances.

The intended effect of the disclosure is to: 1) inform the membership as to the virus’ presence in the community, a fortunate side effect of which is promoting trust and transparency; 2) educate members how to best protect themselves and their neighbors through following the Governor’s Order and the CDPH Guidelines by staying home and using proper hygiene; 3) apprise members what the Association is doing to stop the spread of the virus; and 4) instruct members per the CDC website, that if they think they have been exposed to COVID‑19 and develop a fever and symptoms, such as cough or difficulty breathing, they should call their healthcare provider immediately for medical advice.

Associations are encouraged to work with their counsel to prepare such disclosures given the legal implications of properly balancing the disclosure of private and sensitive information related to a member’s health with promoting the health and safety of the membership during a pandemic.

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

Managing the Coronavirus – A Discussion of Preliminary Board Concerns

Published on: March 18, 2020 | by Steven J. Tinnelly, Esq.

covid-19-1330px Over the last few business days, our firm has received several calls regarding the Coronavirus (COVID – 19). We understand the obstacles created by COVID – 19 because successful association governance depends upon engaged community involvement and personal interaction.

The purpose of this blog post is to provide a brief overview of our response to some of the common questions we have received. It is based upon information which is currently available as of March 17, 2020. The recommendations set forth herein are subject to change based upon governmental mandates.

Continuance of Necessary Business Operations:

Community associations, as non-profit corporations, should continue to perform essential business operations (i.e. collect Member assessments and pay Association bills) during this epidemic. As of the time of this drafting (3/17/20), President Trump released new guidelines to slow the spread of COVID – 19 by advising the public to avoid groups of more than ten (10) individuals, among other safeguards. Governor Newsome recommends that restaurants eliminate dine-in options and the closure of movie theaters and health clubs. Medical professionals have uniformly taken the position that social distancing can minimize virus transmission. In view of those protections, boards, in consultation with management and legal counsel, should consider the temporary closure of community-based events and functions, particularly in situations where residents constitute a high-risk demographic (i.e. age-restricted communities).

Board Meetings:

Board meeting procedure is regulated by an association’s governing documents and the Civil Code. An association’s by-laws will set forth the frequency of board meetings. Boards should consider postponing non-essential general session board meetings, or in the alternative, conducting essential association business in executive session only via teleconference as permitted by California law. Boards may conduct general session and executive session board meetings via teleconference upon proper notice which identifies at least one physical location so that Members of the association may attend (Civil Code Section 4090 (b)). At least one director or a person designated by the board shall be present at that location (Civil Code Section 4090 (b)).

To the extent possible, efforts should be made to protect Member rights, such as the right to attend board meetings and participate in homeowner’s forums. How do we balance those rights with current social distancing recommendations? There might be a viable path under the Open Meeting Act. Members possess the legal right to attend general session board meetings and shall be entitled to attend teleconferenced board meetings (Civil Code Section 4925). An argument could be made that Members may attend general session board meetings via teleconferencing means if such board meeting was previously noticed as a teleconference board meeting and the procedural requirements are satisfied as referenced above. Discuss with legal counsel whether the Open Meeting Act could be interpreted to allow Member attendance (via audio and/or video means) at teleconferenced board meetings instead of physical presence at the meeting location.

We recommend that boards consult with legal counsel to discuss teleconferenced general session board meeting procedure before deciding to hold open meetings without members and then issuing minutes thereafter. It is unclear how a superior court judge, in the event of a later Member challenge, might evaluate the handling of board meeting procedure during this current state of emergency. A possible judicial response might be to review how the association attempted to substantially comply with the law using the governance tools that are presently available through the Open Meeting Act.

Member Notice:

Medical professionals state that individuals respond to crisis and stress in different ways; it is very likely that some may be scared while others may not be. Residents may look to the association and management for guidance and direction. For that reason, transparency is desirable. Boards should work with their management partners and legal counsel to develop a policy statement which identifies how your community intends to respond to COVID – 19 with respect to association meetings and community affairs. In the event of common area closure or facility limitations, notices should be posted which explain the board’s reasoning in that regard. Association residents should be directed to governmental agencies (e.g. CDC, California Department of Public Health, and county health agencies) for more information.

On March 12, 2020, California Governor Gavin Newsom issued Executive Order N-25-20 (“Order”) which modified how legislative bodies may conduct public meetings via teleconference under the Brown Act. That Order does not apply to private association meetings which are governed by the Open Meeting Act and we are not aware of emergency legislation that might govern how association meetings are expected to be handled during this health crisis. Although not applicable, the spirit of the Order’s final provision should be considered as we think about association governance during this time; namely, the Order concludes by stating that, “all state and local bodies are urged to use sound discretion and to make reasonable efforts to adhere as reasonably as possible to the provisions of the … Brown Act, and other applicable local laws regulating the conduct of public meetings, in order to maximize transparency and provide access to their meetings.”

It is critically important that boards work closely with their management partners and legal counsel to develop practical solutions regarding Board governance which, to the extent possible, complies with the Open Meeting Act while protecting Member safety.

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

There is no Such Thing as a Free Lunch – Or a Free Clubhouse: Implementing Reasonable Limitations on Political Speech and Assembly Rights in California HOAs

Published on: February 25, 2020 | by Steven J. Tinnelly, Esq.

bigstock-Election-Campaign-Election-Vo-131448176-1-1140x660-1 We have just passed the two-year anniversary of California Civil Code 4515. This is the law that protects certain rights of members and residents to political speech and peaceful assembly within California community associations. With election season in full swing, it is important for Boards and management to be reminded that the rights afforded to members and to residents by Civil Code 4515 to utilize Association common area facilities and to campaign are not unlimited.

For many associations, Civil Code 4515 comes into play when members or residents (the code applies to both) seek to use common area facilities to hold campaign or political rallies. Rules that previously required the payment of a deposit and/or fee plus proof of liability insurance to reserve a facility for an event needed to be revised in light of the new law, which prohibits such fees, deposits, and insurance for those using the common area facilities for assembly purposes. Managers and Boards were left with the burden of determining how to differentiate between those wishing to use the common area facilities for private events such as birthday parties where a fee can still be charged and those who desired to use those same facilities for assembly purposes where fees cannot be charged.

Reasonable Restrictions on the Use of Common Area Facilities for Assembly Purposes. Association rules & regulations and facility use agreements are useful tools in balancing the requirements of the law with reasonable restrictions that protect the Association. Possible restrictions on the use of facilities for assembly purposes are as follows:

Not open to the public: Both the rules and facility use agreements may require that any 4515-related meetings or events be restricted to members, residents and their guests only so as not to open the Association’s facilities to the public. If the Association is open to the public, it must comply with the Americans with Disabilities Act, a costly endeavor that exposes the Association to potential significant liability if the strict ADA requirements are not met.
Occupancy restrictions: The fire department of each city typically sets maximum occupancy limits for association facilities such as clubhouses. Those reserving the facilities should be required to limit their events to no more than what is permitted by the fire code or to any other reasonable number determined by the Board as the maximum capacity for each facility. Attendance beyond capacity burdens Associations with traffic, potential for unruliness and nuisance, and excess strain on common area components such as restrooms.
Responsibility for damages: Although no fee or deposit may be charged upfront, this does not mean members cannot be held responsible for damage caused to the common area by their residents and guests during 4515-related gatherings. A facility use agreement may be required for anyone reserving the facilities. Reservations should be required in advance and a stated purpose should be required when making the reservation that the meeting is for proper assembly purposes pursuant to Civil Code 4515. If a non-member resident wishes to use a facility for a proper assembly purpose, the member who owns the Lot/Unit where the resident resides may be required to sign such an agreement assuming responsibility for any damage caused at their event. Additionally, most CC&Rs contain a provision that makes members responsible for damage caused to the common area by them, their tenants or guests and many of these damages can be levied as a reimbursement assessment, depending on the language of the Association’s CC&Rs.
Cleaning fees. A facility usage agreement can also require that a member and/or resident reserving a common area facility return the facility in the same condition in which they received it, which includes cleaning and the disposal of trash. If the individual fails to return the facility in the same condition, the Association can charge the responsible member for cleaning fees as required by a facility usage agreement.
Parking: Parking is a concern for many associations and the scheduling of a large rally poses a potential strain on Associations where parking is limited. Civil Code 4515 does not afford members or residents with additional parking rights. That means that the existing parking rules and regulations apply to attendees of an event for assembly purposes. Once the guest spaces are all occupied, attendees must make arrangements to park elsewhere to avoid being cited and/or towed as provided in the Rules. This should be made clear in any facility use agreement so advance arrangements for parking for their guests if necessary. Compliance by all attendees with the governing document provisions, not just its parking provisions, should be required by the rules and/or a facility use agreement for assembly-related events.
Alcohol use: The Association may ban the use of alcohol at events for assembly purposes – even if alcohol is allowed at private events. Because procuring insurance cannot be required for those reserving facilities for assembly purposes, it is reasonable to ban alcohol or other activities which may increase legal exposure to the Association at these gatherings. Likewise, items such as sound equipment that may be used for private events can be withheld from assembly events with no deposit so long as this limitation is made clear in the facility use agreement and/or rules.
Compliance with the governing documents. Members and residents and their guests using common areas must still comply with the provisions of the Association’s governing documents including as to noise levels, parking, cleaning up after service animals, etc. This can be made clear in a well-drafted facility use agreement.
Reasonable hours: Holding a political rally does not give members and residents 24-hour access to the Association’s facilities or rights above members who request to use the facilities for their private events. Rules should be adopted that ensure all members have equal access to these facilities, including for private events, and that the events end at a reasonable time to ensure noise levels are not interrupting residents’ quiet enjoyment of their property.
Designated Areas. Often, an Association’s clubhouse is near a pool or to other facilities and guests of the assembly event spill out into other areas not reserved for the event. A facility use agreement can require that the event must be contained within the reserved facility and that guests may not migrate beyond said designated area.

What is a Proper “Assembly” Purpose Under Civil Code 4515? Most Associations are concerned about the potential abuse of this statute in the form of members reserving facilities without paying a fee stating it is for assembly purposes when it is really just a private event. Examples of qualified purposes of assembly are to discuss common interest living, association elections, legislation, election to public office, or any initiative, referendum, or recall process involving the Association or other political body. If the stated purpose for reserving a facility does not fall into one of these categories, then it is a private event.

Limitations on Canvassing and Petitioning. While Associations cannot restrict canvassing, petitioning, or the circulation of materials for political purposes, they can place reasonable restrictions on these activities such as requiring that it take place only during certain hours. This type of political speech often gives rise to complaints by members disturbed by such unsolicited campaigning and door-knocking, but the Association may not bar such free speech activities when done in a reasonable manner.

To implement reasonable and common-sense restrictions on political speech and assembly without violating Civil Code 4515, HOAs should have their legal counsel review their current rules and policies with respect to campaigning, solicitation and common area use and to prepare agreements concerning the use of common area facilities. Rules or policies which violate Civil Code 4515 subject the HOA to court action and fines.

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

Overzealous Board Members: Understanding the Scope of the Board’s Authority to Enforce the Governing Documents

Published on: January 14, 2020 | by Steven J. Tinnelly, Esq.

how-should-a-weak-leader-stand-up-against-butt-in-590b43b68caab Homeowners associations (“HOAs”) are governed by a group of volunteer members known as a “Board of Directors” (“Board”). Their primary responsibilities include: (1) managing the common areas, (2) managing the HOA’s finances, (3) setting policies to assist in the operation of the HOA, and (4) enforcing those policies along with the HOA’s governing documents. The Board is therefore vital to the effective operation and management of the HOA, as well as preserving the property values of the HOA’s members.

As indicated previously, one of the primary responsibilities of the Board is to enforce the governing documents. (See Posey v. Leavitt (1991) 229 Cal.App.3d 1236.) In fact, a majority of members purchase their units within the Association in reliance on the governing documents being consistently and faithfully enforced by the Board. However, that power may be abused in situations where a director uses his or her position to target and/or harass particular residents within the community. (See generally Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal.4th 361, 383 (“Of course, when an association determines that a unit owner has violated a use restriction, the association must do so in good faith, not in an arbitrary or capricious manner, and its enforcement procedures must be fair and applied uniformly.”).) It is therefore important that the Board, and not any one individual Board member, take action to enforce the governing documents.

The foregoing is not to say that individual directors are precluded from observing and reporting violations. Indeed, a HOA necessarily relies on its members (including its Board members) to report instances where the governing documents may have been breached. Photographing the potential violation is not problematic to the extent that the photograph captures an area that may be observed from a lawful vantage point (e.g., the common area). However, upon observing/documenting a potential violation of the governing documents, the observing party must report that observation to the HOA’s community manager (“Manager”) so that same may initiate the procedures contained in the Association’s enforcement policy (“Policy”). Individual directors should never communicate directly or indirectly with residents concerning their ostensible violation(s) because doing so heightens the concerns referenced above.

Additionally, it is important to point out that the Manager is not acting on his or her own volition; rather, the Manager is executing the duties delegated to him or her by the Association. Therefore, the Manager is acting on behalf of, and at the direction of, the Association. This distinction is important because it underscores the fact that the action is being taken by the Association or at the Association’s direction, and not by any one individual.

In light of the foregoing, each Board member should employ the following procedure when observing a violation of the HOA’s governing documents:

Any observed violation shall be reported to the Manager in writing and shall include any supporting information (e.g., a detailed description of the violation, photographs, etc.).
Thereafter, the Manager, and not the observing Board member, must comply with the procedural requirements contained in the HOA’s Policy, which typically requires the preparation and mailing of a “courtesy notice” to the offending resident advising same of the alleged infraction.
If the violation continues to occur, the Board should direct the Manager to prepare correspondence inviting the offending resident to a hearing before the Board.
At the hearing, the Board may impose discipline pursuant to the Association’s governing documents.
The observing Board member must not communicate with the offending resident at any point during the enforcement process (unless otherwise authorized by the Board).

The foregoing procedure emphasizes the fact that the HOA acting through the Board, and not any individual member of the Board, enforces the governing documents. Following this procedure will mitigate the Board members’, and by extension, the HOA’s, liability exposure.

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

Limitation on HOA Tort Liability for Failure to Uphold Maintenance Obligations

Published on: January 6, 2020 | by Steven J. Tinnelly, Esq.

*New Case Law

One of the primary purposes for which a homeowners’ association (“HOA”) is formed is to maintain and repair the HOA’s common areas, as well as any other areas designated within the HOA’s recorded Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) (i.e., HOA Maintenance Areas). Faithfully executing the maintenance obligations under the CC&Rs is important to preserve property values and generally enhance the quality of life of all residents residing in the community. Failure to do so may expose the Association to liability.

For example, in the recent case of Sands v. Walnut Gardens Condominium Association, the California Appellate Court held the HOA could be responsible for damages sustained by a homeowner as a result of a plumbing leak originating from a pipe on the roof of the condominium building (i.e., HOA common area). ((2019) 35 Cal. App. 5th 174, 176.) In Sands, the HOA repaired the pipe and the roof, but did not compensate the homeowners for the damages they sustained to the interior of the unit and their personal property. The homeowners sued the HOA for breach of contract and negligence.

In addressing the former first (i.e., the breach of contract claim), the Court of Appeal noted that the HOA had a contractual obligation under the CC&Rs to maintain the common area in “a first-class condition.” (Id.) A jury could find that the HOA breached that contract by failing to perform preventative maintenance, and by failing to periodically inspect the pipes and roof. The Court dismissed the HOA’s argument “no evidence showed [that] the [HOA] was ‘on notice that it needed to make repairs or do something to the roof or the pipes.’” (Id.) Rather, it was sufficient that the HOA knew that no maintenance was being performed, which a jury could find as a breach of the CC&Rs’ requirement that the common area be maintained in a first-class condition.

However, as to the second cause of action for negligence, the Court sustained the trial court’s judgment of nonsuit (i.e., the homeowners failed to present sufficient evidence to conclude that the HOA was negligent). The Court noted that “the [HOA] had no independent duty as to the pipes and roof arising from tort law.” (Id. at p. 177.) In other words, absent a showing of a duty independent of the CC&Rs, an HOA cannot be held liable for the tort of negligence.

This case is important for several reasons. First, while 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, the rule does not protect HOAs when they fail to perform any preventative maintenance and/or periodic inspections. Thus, a HOA should not wait until it receives maintenance requests and/or notice from homeowners concerning the need for common area repairs; rather, the Board should consult with experts and establish a preventative maintenance program addressing all common areas.

Second, there is no separate tort claim (e.g., negligence claim) for a HOA’s failure to maintain the common area. This is not to say, however, that a HOA will not be liable under a negligence theory for other reasons. For example, if a HOA voluntarily assumes a duty to protect residents from criminal activities and breaches that duty, the HOA may be held liable for negligence. (See Frances T. v. Village Green Owners Association (1986) 42 Cal. 3d 490.) The language contained in Frances T. also seems to suggest that a HOA may be found negligent for failing to maintain the common area which results in personal injuries. (Id. at p. 499.)

The case of Sands v. Walnut Gardens highlights the importance of properly executing maintenance obligations under the CC&Rs. While the Board is granted judicial deference in determining how the common areas are to be maintained, a HOA may be held liable for its failure to investigate maintenance problems and to take reasonable action. (See Affan v. Portofino Cove Homeowners Association (2010) 189 Cal. App. 4th 930 [the deference afforded to HOA Boards may not extend to situations where the Board fails to act or to investigate the scope of required maintenance or repairs].) HOA Boards should therefore consult with experts to establish and execute an appropriate common area maintenance plan.

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

Dog Parks: Best Practices for Limiting an HOA’s Liability Exposure

Published on: December 26, 2019 | by Steven J. Tinnelly, Esq.

dogparkdogs One of the many benefits of living in a homeowners association (“HOA”) is the amenities provided to its residents. Common amenities include recreational rooms, pools, and fitness facilities. One amenity gaining in popularity is designated for the community’s canine companions: dog parks. Dog parks provide dogs with a designated off-leash area where they can run, exercise and play while minimizing damage to other common areas. However, having such an amenity could increase a HOA’s liability exposure, especially if the dog park is not designed properly and the HOA does not have rules and regulations governing the use of the dog park. Accordingly, the purpose of this article is to provide HOAs with best practices and guidance on adopting rules regulating the dog park.

Design

For HOAs contemplating the construction or installation of a dog park, or for those with pre-existing dog parks, the Board of Directors (“Board”) should consider the park’s design. One critical design aspect is the fence enclosing the dog park; the fence should be tall enough so that a large dog cannot jump over it. Additionally, the entrance into the dog park should be through a double-gate system. Such a system reduces the likelihood of a dog escaping. Finally, the HOA should also have two separate areas; one for larger dogs and one for smaller dogs. These are just a few of the design features a Board should consider when creating or modifying a dog park.

Rules

Most HOAs already have rules regulating the maintenance of pets within the community. However, if a HOA is considering installing a dog park, it should incorporate rules specific to the park. Moreover, those rules should be posted at all entrances to the park in a highly visible location.

Some rules to consider include the following:

Dogs are permitted to be off leash while in the dog park provided that they are able to respond to audible controls, such as whistling.
Dogs must be leashed upon exiting the dog park.
Dog owners shall remain in the dog park and shall maintain visual observation of their dog at all times.
Dogs must be current on all vaccinations.
Dogs with known violent propensities or aggressive behavior are prohibited from using the dog park. Any dog showing signs of aggression while in the dog park shall be removed immediately by the dog owner.
Owners shall pick up their dog’s waste. Waste must be put in a tightly sealed plastic bag before being disposed of.
Owners are required to fill any holes created by the owner’s dog.

Dog parks are a great amenity but can increase a HOA’s liability exposure. It is therefore important for the Board to engage legal counsel before beginning the process of constructing and installing a dog park to ensure that the HOA is protected.

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