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Articles Posted in HOA Housing

New ‘Community Association Update Newsletter’ – Issue 57

Published on: March 3, 2023 | by Steven J. Tinnelly, Esq.

Newsletter-Issue-57-300x167 In case you missed it, Issue # 57 of our ‘Community Association Update’ newsletter is available now!

Topics covered in this issue include:

AB 1410 – Speech on Social Media; Room Rentals; Enforcement During Emergencies
AB 1738 – EV Charging Stations in Existing Multi-Family Developments
SB 897 – Accessory Dwelling Units
Artus v. Gramercy Towers
Fowler v. Golden Pacific Bancorp, Inc.

A link to the newsletter is here.

Need to be added to our mailing list? Click here to sign up. Links to previous editions of our newsletter can be found here.

How to Direct Questions from Potential Homebuyers

Published on: December 7, 2022 | by Vivian Tran, Esq.

Civil-Litigation Since COVID-19, followers of the real estate market may have noticed that the housing market is currently booming. There are not as many sellers as there are buyers, so the competition to obtain a buyer’s dream home is through the roof. Many of these potential buyers are looking to buy their next home within a community association (“HOA”). The competition to buy homes creates an increase in the number of questions from real estate agents and mortgage/escrow companies that are directed toward the association and its agents regarding any litigation involving the association. What should the Board and manager be aware of? What should they do in certain situations?

The HOA has no legal obligation to make disclosure to buyers of properties within the HOA or other third parties. These third parties may be real estate agents, loan processors, escrow companies, or anyone else looking for information regarding the HOA and is not an HOA member.

Even though the HOA has no legal obligation to make disclosures, its management company and even its Board will be asked numerous times by third parties to provide further information regarding any pre-litigation matter or lawsuit the HOA is engaged in. Some typical questions are:

- - Can the HOA or management provide a copy of the complaint?
  - Can the HOA provide certain certifications or expert documentation?
  - How much money is the HOA and/or management being sued for?
  - Would the anticipated or known damages and legal expenses be expected to exceed some percentage of the HOA’s reserve fund?
  - Can the HOA’s attorney provide an opinion that any award granted in the lawsuit will be covered under the HOA’s master insurance policy?
  - When will the matter be resolved and will it be resolved in the HOA’s favor?

Sometimes, these third parties will require that the answer to the above questions come from the HOA’s legal counsel. In any case, neither the HOA’s Board, nor its managing agent, or any of its agents (including legal counsel) should answer any of the above questions. If legal counsel is handling the matter, they should prepare a disclosure letter that the HOA may use to present to any third parties requesting further information. In addition to not answering any of the questions above, the disclosure letter should also not contain any predictions or conclusions. The more vague the better, as the disclosure letter is meant to be an official tool to block further communication from third parties. If applicable, the disclosure letter will provide the appropriate contact information if the HOA’s insurance carrier picked up the case and assigned insurance defense counsel and an adjuster. If the HOA and its managing agent need help navigating this scenario, they should direct all questions to its legal counsel.

If a homeowner wants more information regarding any pre-litigation or lawsuit in order to refinance their home, and the pre-litigation or lawsuit is not resolved, no material or information should be disclosed beyond the fact that things are in progress. The general disclosure letter may be provided to the homeowner. The HOA is not obligated to assist homeowners in refinancing and should not if the information being requested is privileged (confidential).

Any questionnaire sent to the HOA or its managing agent should be forwarded to legal counsel for analyzation. The questionnaire should not be filled out and returned without legal counsel’s input as any disclosures might create unwanted liabilities for the HOA.

While evading questions from homeowners and third parties might seem frustrating, such action is a necessity. Pre-litigation and the proceedings of a lawsuit do not guarantee any outcome. The HOA and its managing agent should know that homeowners and third parties will be very aggressive in trying to obtain further information. However, the best course of action would usually be to: (1) direct the matter to the HOA’s legal counsel; (2) provide the disclosure letter; and (3) indicate, in some fashion, that there is no further information at this time as the matter is ongoing or in the process of being resolved (descriptions will vary depending on each scenario).

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

Navigating DFEH Investigations And Complaints

Published on: September 14, 2022 | by Vivian Tran, Esq.

download Homeowner and tenant complaints filed with California’s Department of Fair Employment and Housing (“DFEH”) are on the rise and are increasingly lodged against Associations, Boards, and management companies. The complaints are generally directly filed with the DFEH on a variety of grounds, but occasionally involve certain fair housing claims that are referred to the department by the U.S. Department of Housing and Urban Development (“HUD”).

The DFEH is responsible for enforcing state fair housing laws that make it illegal to discriminate on the basis of categories like sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation. The department’s broad enforcement authority applies to housing providers including common interest developments, landlords, and property management companies.

A typical DFEH complaint process commences with DFEH complaint including service of a short statement of allegations from the homeowner or tenant. This usually signals the beginning of a rigorous inquiry and investigation for the Association, its Board, and the management company, all of whom may be initially identified as actual or potential respondents.

While the DFEH in theory is supposed to be neutral in its investigations, the investigators working for the department often tend to be sympathetic to the complainant(s) by virtue of the tenets of the department and may therefore adopt the role of an advocate when serving severe demands and questionnaires on the respondent(s).

Moreover, it is important to note that the initial complaint filing with the DFEH does not mean that the DFEH has already determined whether there is reasonable cause to believe any laws have been violated or that the DFEH will in fact prosecute a legal action against the named respondent(s). Rather, it means that the DFEH has preliminarily determined that the received complaint, the allegations, and the named parties fall within the investigative purview of the department and are subject to the laws that the DFEH is tasked to enforce.

Nonetheless, because this process tends to be quite involved with numerous nuanced considerations and legal implications for the Association, its Board, management, and the Association’s insurance carrier, Boards should immediately engage the Association’s legal counsel at the very outset to help it navigate the DFEH’s demanding process and help formulate a comprehensive legal strategy.

The above notwithstanding, as an alternative to the department’s active investigation, the DFEH also has a mediation program, whereby it attempts to resolve complaints through free internal dispute resolution services. If the parties mutually agree to mediate, then the complaint response and the active investigation is stayed pending the outcome of the DFEH mediation.

Otherwise, the DFEH investigation continues, and the department will assess the facts and legal issues of the case. These investigations include, among other things, reviewing information and evidence from complainants, respondents, or other sources. When a respondent answers a complaint, the DFEH investigator reviews it with the complainant. Meanwhile, the respondent(s) may contact the assigned investigator to discuss the complaint, request any needed extension of time to respond to the department’s investigative questionnaires, or to address any other concerns.

Thereafter, the DFEH uses the facts obtained through its investigation to determine if there is reasonable cause to believe that a law the department enforces has been violated. If not, the case is closed. If there is reasonable cause, the investigator notifies the parties of this determination, may advise that the department intends to file a lawsuit in court, wherein the department replaces the complainant(s) as the moving party and substitute in as the Plaintiff, and the DFEH’s legal department will then take over the matter for further handling.

However, before the DFEH files a lawsuit, it typically requires the parties to go to mediation. If the case is not settled during this mediation, the DFEH may proceed with filing its lawsuit in court.

Typical settlement remedies at mediation and/or relief sought in DFEH actions include payment of statutory monetary fines and other damages, attorney’s fees and costs, amendment of Association’s CC&Rs and rules, Board and management staff undergoing fair housing training regarding the rights and responsibilities of housing providers, posting of DFEH fair housing posters throughout the community and/or distributing fair housing brochures to all residents, etc.

Based on the above rigorous DFEH process and the range of challenges it presents, it is imperative that the Association’s Board and management stay ahead of the problem by ensuring that their actions and policies are in accordance with the California Unruh Civil Rights Act, the Federal Fair Housing Act, and that they do not inadvertently run contrary to state and federal laws that prohibit discrimination based on the above cited categories.

Moreover, the Association’s legal counsel should be engaged at the very outset of any DFEH complaint process so it may duly protect the Association’s interests and help the Board navigate the above-outlined demanding process.

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

What to Do if There is HOA Slope Movement/Failure

Published on: October 20, 2021 | by Vivian Tran, Esq.

LBLandslide060105 Southern California is known for the warm weather, relaxing atmosphere, and in certain cases, picturesque Homeowners Associations (HOA) situated high enough to see the ocean. However, what happens when those picture-perfect HOAs have a slope movement/failure? What should the Board of Directors (Board) do?

Slope Maintenance

Slopes within an HOA development are usually maintained by the HOAs via a maintenance agreement, by the Lighting and Landscape Assessment District (LLAD), or by the homeowners themselves. Slope maintenance involves management of sub-surface and above-surface areas.

Sub-surface maintenance will most likely involve vegetation root volume and irrigation system preservation, which is integral in supporting the slope structure itself. For steeper slopes, there might be a heavier support system built into the slope. Above-surface maintenance will most likely involve vegetation/brush preservation for aesthetical purposes and to prevent fire hazards, among other things.

The HOA’s management should routinely follow-up with the HOA’s landscape maintenance crew to monitor the slope, v-ditch (concrete channel usually at the bottom of a hill to collect drainage) and other drainage routes, and water pipelines. If maintained properly—barring extenuating circumstances—naturally occurring slope movement should be very minimal. It should be noted that there is always some sort of slope movement due to erosion and time. However, should abnormal slope movement/failure be noticed, the HOA’s management company and Board should and must be notified immediately.

Improvements on Slopes

The structural integrity of slopes is very complex. This means homeowners should consult with the HOA’s management and Architectural Committee before placing any improvements on or surrounding the slope as improperly engineered improvements may cause unwanted slope movement/failure.

Improvements may vary, but the most common ones are plants, fences, poles, pipes, decks, patios, and walkways. The Board should be aware of any improvements that change or interfere with the contour/drainage/support system of the slope. It would be prudent to require homeowners to submit an Architectural Application consisting of detailed improvement plans that have been vetted by a licensed geotechnical expert familiar with slopes. Furthermore, to cover all bases of liability, the Architectural Committee should retain its own geotechnical expert to analyze whether allowing said improvement(s) would be detrimental to the integrity of the slope. Such measures might cost a bit upfront, but compared to a major slope movement/failure, a geotechnical bill to analyze improvement plans would be inconsequential.

Board Action

An HOA’s Board will be called upon to act in the event of slope movement/failure. It is important for the Board to take immediate action as slope movement/failure can be detrimental to the physical wellbeing of everyone in the community and the homeowners’ properties involved. Additionally, immediate action will ensure that more data may be collected for the analyzation of the slope movement/failure. Here are a few things for the Board to consider:

Note the approximate time of the slope movement/failure
Catalog picture and video evidence of the slope movement/failure and any homeowners’ property damage
Contact the HOA’s general counsel
Create an executive committee to promptly handle all matters pertaining to the slope movement/failure
Consult/retain a geotechnical expert as soon as possible
Contact the HOA’s landscape maintenance crew regarding any potential broken irrigation pipelines and/or hazardous vegetation, if applicable (e.g., if there is a leak, the maintenance crew should try to perform temporary repairs/stoppage, or as advised by a geotechnical expert)
Contact the HOA’s insurance carrier and tender claims as necessary (note that some HOA policies might have exclusions regarding earth movement/slope failure, but the HOA’s general counsel will be able to navigate those areas with the insurance representative)
Involve the homeowners’ insurance carrier if they have property damage due to the slope movement/failure
Prepare and have ready past HOA water irrigation reports, water invoices, landscape maintenance invoices…etc.
Review the HOA’s budget and all/pending capital expenditures
Consider winterizing the slopes if the slope movement/failure occurs before or during the rainy season

The following above is by no means an exhaustive list, but it is the bare minimum the Board should do in the event of a slope movement/failure. After the HOA’s counsel and geotechnical expert have been consulted, there would usually be four (4) phases to go through before the slope is back to its original condition: (1) preliminary above-surface investigations (i.e., measurements of movement/failure, noting any damages, reviewing HOA records…etc.); (2) sub-surface invasive investigations (i.e., digging, collecting soil samples, lab analyzation…etc.); (3) drawing building/repair plans and obtaining city approval; and (4) rebuilding/repairing the slope. The HOA should expect each phase to take a minimum of one (1) month if all parties—Board, homeowners, counsel, insurance carriers…etc.—cooperate. However, if parties are uncooperative, the phases can be delayed by months if not a year or more. Moreover, if there is slope movement/failure during the rainy season, the slope must be winterized (e.g., protected against further rainfall, water pooling) and rebuilding/repairs will likely not begin until the spring when the ground is a bit drier.

The Board must keep in mind that should the slope movement/failure be extreme, the costs associated with determining the cause and rectifying any damages will be vast (~ $300K if not more). This is not taking into account any legal disputes between the parties as liability and responsibility for the slope movement/failure will not be clear until after phase 2 investigations. Therefore, if HOAs have a slope movement/failure, it is best to contact general counsel immediately!

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

SB 9 Signed! Statewide Re-zoning of Single-Family Neighborhoods & Urban Parcel Splits

Published on: September 21, 2021 | by Steven J. Tinnelly, Esq.

*New Legislation

Senate Bill 9 (SB 9) was recently signed into law making revisions to the California Government Code effective January 1, 2022. This bill is touted as a major step in California’s efforts to address the housing crisis by re-zoning single family lots to allow for duplexes and more. Below is an overview of some of the primary components of this rather complicated legislation.

Construction of two (2) units on a single parcel zoned as single-family residential

California law will now permit the division, partial or full tear down of an existing single-family home to create two (2) separate residential units, which need not be attached and which are eligible to be sold separately. A municipality will be required to ministerially approve such a project without any significant review or public comment. Because this law will operate in conjunction with existing law permitting the construction of Accessory Dwelling Units (ADUs), it will allow even more units to be built on the parcel without public review. Local ordinances that would physically preclude construction of the two units cannot be enforced. Any parking requirements to be imposed by local ordinances must be limited to requiring only one “parking space” (not necessarily a garage) per residential unit, and must be eliminated entirely if the project is located within one-half mile of public transit or if there is a car share vehicle located within one block of the project.

Splitting of an existing parcel into two (2) separate parcels

SB 9 also permits urban lot splits in residential zones to create two (2) equal parcels of a minimum of 1,200 square feet. It further prohibits the application of local requirements that would physically preclude the construction of two (2) units to be built on each split lot, subject to other requirements of questionable merit and enforceability (e.g., the ability for a local requirement to be imposed mandating that the owner of the parcel ‘certify’ that they will live in one of the units for at least the first three (3) years after the project’s completion). The parcel split may operate in conjunction with SB 9’s allowance of two (2) separate residential units on a single parcel–allowing for four (4) units to ultimately be constructed on a parcel where only one single-family home may have existed (and even more units if ADUs and JADUs are also constructed on the newly subdivided parcels).

*Impact on HOA CC&R Restrictions is unclear – The common question/concern we are receiving in connection with SB 9 is whether it will override homeowners association (HOA) governing documents that prohibit the type of development projects within HOAs that SB 9 is intended to provide. For example, it is common for an HOA’s CC&Rs to contain provisions prohibiting homeowners from subdividing their lots. Unfortunately, SB 9 is silent with respect to this issue and those in the HOA legal community are concerned that SB 9 could be construed as demonstrating public policy in favor of these types of projects. California courts have held that CC&R restrictions which violate public policy may be challenged and held as enforceable. (See Narstedt v. Lakeside Village Condo. Assn. (1994) 8 Cal. 4th 361).

Senator Toni Atkins, the author of SB 9, submitted a letter to the California Secretary of State ostensibly addressing this concern. It provides in pertinent part that:

“…on the issue of common interest developments (CID) and homeowners’ associations (HOA). My office has consulted with Legislative Counsel, and SB 9 would not override CID or HOA restrictions. Specifically, SB 9 is silent on the issue, meaning the bill contains no provisions that supersede HOA or CID governing documents. As we have seen with other housing legislation, SB 9 would have to contain an explicit and proactive provision to override those rules. This bill does not.” (Emphasis added.)

While superficially this may seem helpful, it notably fails to state anything regarding the intent of SB 9 and the California Legislature with regard to this issue. The letter does not have the force of law and whether it will be given weight by California courts in assessing the public policy of SB 9 as it applies to HOAs is anyone’s guess. Moreover, efforts by CAI’s California Legislative Action Committee to request changes to SB 9’s language to explicitly state that it does not override HOA governing documents were ignored.

Questions remain as to what, if any, impact SB 9 will have on HOAs and the degree to which homeowners, investors and residential developers will actually find it financially advantageous to pursue multi-unit residential projects within single-family common interest developments.

Megan’s Law HOA Disclosures Regarding Registered Sex Offenders – Proceed with Caution!

Published on: July 28, 2021 | by Steven J. Tinnelly, Esq.

MEGAN4 Megan’s Law is a federal law that permits authorities to release information about registered sex offenders (“Registered Offender”). California has a database of Registered Offenders available for public viewing on the internet (see www.meganslaw.ca.gov). Searches can be done by a Registered Offender’s name, or by city, zip or within a predetermined radius of a selected park, address or school. Once a Registered Offender has been located, his or her picture is displayed, as is the person’s present address, offenses, known aliases and any distinguishing scars, marks and tattoos.

An HOA Board (“Board”) is not prohibited from sharing information obtained from this database with its membership provided it is for the purpose of protecting persons at risk. Additionally, California Penal Code Section 290.03 allows Boards to pass that information along to the Association’s membership as long as it merely restates factual details. However, Boards should nonetheless thread very carefully when considering making disclosures regarding Registered Offenders within the Association because any error in its disclosure could lead to potential civil as well as criminal exposure.

While Directors on a Board are fiduciaries, there does not appear to be a duty by Directors under CA law to disclose the presence of or other information regarding a Registered Offender in the Association. Moreover, due to the different tiers or classifications for Registered Offenders, not all are deemed dangerous notwithstanding their underlying wrongful conduct. Additionally, the law has created protections for Registered Offenders who have “paid their debt” to society and have been released from custody. The only time disclosure is allowed is to protect persons at risk.

Moreover, the disclosure must not be for the purpose of discriminating against or harassing the Registered Offender. Impermissible disclosures or conduct that prejudices such residents (i.e. limiting access to common areas/amenities or otherwise embarrasses the resident) are arguably discriminatory and could lead to criminal prosecution and civil liability.

However and with the above considerations and potential risks in mind, the following options are available to a Board:

Make No Disclosure. The Board could elect not to mention the presence of the Registered Offender. This avoids any potential risk of liability that may arise from improper use of the information, improper notification, or mistaken identification. However, if a child in the Association is molested by the Registered Offender, the parties involved might sue for failure to notify the membership of the potential danger.
Direct Members to the Website. The Board could include a notice in the Association’s newsletter about the Megan’s Law website without any comments about the Registered Offender living in the Association; it would simply encourage members to examine the website and contain certain disclaimer language.
Contact the local Police Department and ask it to give notice to the membership. The advantage is that the Board would avoid potential liability for giving improper notice. The disadvantage is that the agency may refuse to give notice (the more likely scenario).
Lastly, the Board could elect to disclose the identity and address of the Registered Offender. However, this option carries much risk. Although the Registered Offender status is publicly-available information, the direct disclosure of the identity and address may put the Board in violation of the protective statute and create potential for defamation since the information on the State’s website may not be accurate. Moreover, if the Association makes disclosures regarding the Registered Offender, the members may then assume unrealistically, and unreasonably, that the Association is responsible to protect them.

Of the foregoing options, perhaps the most conservative and arguably most prudent is to consider putting a standard notice in the Association’s newsletters that would appear in all future newsletters or website (if applicable). The notice should be generic and state something similar to the following: “For information on registered sex offenders, visit www.meganslaw.ca.gov.” This way, no person in the Association is singled out, but the membership is at least put on notice and provided some guidance to look up the publicly-available information for themselves.

Additionally, it may be best to also indicate that it is not the Association’s responsibility to track or monitor the Registered Offender list, nor to take any action if there is a Registered Offender within the community. Use of such wording would place the responsibility on the residents to check the publicly available website and take whatever precautions they believe is necessary to protect themselves and their families.

If the Board wishes to take more proactive measures while mitigating exposure then the Association’s patrol vendor can be informed of the Registered Offender with clear instructions that they are not to single out or harass the Registered Offender, they must not disclose identifying information about him or her to other residents, and that they shall immediately notify law enforcement if they encounter obvious misconduct that presents an imminent risk to others and particularly when vulnerable groups such as minors are involved.

Otherwise, it may be best not to fully disclose the identity of the Registered Offender to the Association’s personnel, but rather generally put them on notice of the issue for enhanced patrolling purposes. This way, the patrol service can be tasked to generally remain vigilant to promote a sense of safety, but not be given express or implied license to target anyone in particular.

If the Board believes that a Registered Offender has moved into the Association in violation of California or federal law or if the Association would like to generally develop a plan to protect it and its membership, then the Board should immediately consult with the Association’s legal counsel. For example, legal counsel can review all guidelines and restrictions for the Registered Offender housing. It is possible that someone in the Association is operating a licensed day-care center that was not considered when granting the Registered Offender housing, or that your community includes a public park that was not officially recognized at the time of the housing determination. These and many other considerations can be explored with the help of your legal counsel to help protect your Association without creating any unnecessary exposure for the Board.

-Blog post authored by TLG Attorney, Sam I. Khil, Esq.

Addressing Neighbor-to-Neighbor Disputes

Published on: February 10, 2021 | by Steven J. Tinnelly, Esq.

116390863_l-1024x683-1 Neighbor-to-neighbor disputes are on the rise. These types of homeowner conflicts are typically characterized as governing document violation complaints that are personality conflicts between neighboring homeowners rather than legitimate concerns that impact the Association and its membership more broadly. Refereeing these squabbles can quickly become burdensome and costly for an Association and its volunteer Board where the complaining homeowner is attempting to use the Association’s enforcement authority as a weapon against their neighbor. Accordingly, Associations plagued with complaints over these types of homeowner tiffs should consider setting clear limits to their involvement in such matters.

Management companies and Boards often receive homeowner complaints for alleged violations that are not easily discernable through a visual inspection of the community. A common neighbor-to-neighbor dispute is a noise complaint like a barking dog or an upstairs disturbance where no other neighbors have complained of the noise and where there are no other witnesses to the alleged ruckus. These complaints are often repetitive, adding to their burdensome nature. Initially, the Board has a duty to investigate the alleged violation, which often falls under a general nuisance provision in the CC&Rs. However, if after investigation, the Board does not find demonstrable or credible evidence that a nuisance or other governing document violation exists, such as where the only evidence is one neighbor’s word against another’s, the Board is well within its authority to deem the matter a neighbor-to-neighbor dispute and to exercise its discretion to decline further action. Failing to exercise restraint in intervening in these disputes could result in problems for the Association by increasing its operational burdens, and by having the balance of its membership subsidize (via their assessments) the resolution of isolated disputes between feuding neighbors that have no bearing on the Association or on a significant portion of its membership.

Declining to intervene in a neighbor-to-neighbor dispute does not leave homeowners without recourse. Each homeowner may enforce the governing documents in their individual capacity against other homeowners (Civ. Code 5975(a)). Depending on the situation, they may also contact local law enforcement, animal control, or request appropriate relief in the civil court. While the complaining homeowner may object to the Association’s use of its discretionary power to decline intervening, “anyone who buys a unit in a common interest development with knowledge of its owners association’s discretionary power accepts the risk that the power may be used in a way that benefits the commonality but harms the individual.” Nahrstedt v. Lakeside Village Condominium Association, Inc. (1994) 8 Cal.4th 361, 374.

Due to uncertainties in determining what constitutes a neighbor-to-neighbor dispute and when to (and when not to) intervene, Boards are encouraged to contact their legal counsel to discuss adopting a Neighbor-to-Neighbor Dispute Policy. Such a policy may be drafted in a manner to prevent the Association’s involvement in a Neighbor-to-Neighbor Dispute until such time as the complaining homeowner demonstrates their willingness to expend their own resources in trying to work out a resolution directly with their neighbor through requiring participation in Alternative Dispute Resolution (“ADR”) before the Board will consider involvement.

Boards are cautioned that legitimate complaints by residents of harassment on the basis of their membership in a protected class are not neighbor-to-neighbor disputes and must be investigated and addressed. See Code of Fed. Reg. §100.7(a)(1)(iii). California HOA’s have been deemed housing providers under the law for purposes of requiring their compliance with this statute. Boards are encouraged to discuss adopting an Anti-Harassment Policy with their legal counsel to address these types of complaints.

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

AB 1885 – Debtor Exemptions: Homestead Exemption

Published on: January 6, 2021 | by Steven J. Tinnelly, Esq.

8-things-you-should-know-about-living-featured The homestead exemption protects the value of a homeowner’s primary residence in the event of a bankruptcy. Specifically, it provides that a specified portion of equity in a homestead is exempt from execution to satisfy a judgment debt. Existing state law prescribes that the amount of this homestead exemption is $75,000 for single homeowners, $100,000 for married homeowners, or $175,000 for homeowners who are seniors and/or disabled. (Code Civ. Proc., § 704.730(a).)

Since the inception of the homestead exemption, California Courts have liberally construed declarations of homestead. (see Johnson v. Brauner (1955) 131 CA2d 713, 722, 281 P2d 50.) California Courts have taken this lenient approach because ‘the law and facts to promote the beneficial purposes of the homestead legislation to benefit the debtor’” [Phillips v. Gilman (In re Gilman) (9th Cir. 2018) 887 F3d 956, 964 quoting Tarlesson v. Broadway Foreclosure Invs., LLC, 184 CA4th 931, 936, 109 CR3d 319 (2010)]. Emphasis added.) However, existing law does not provide for any modifications or adjustments to account for inflation. The legislature has identified this oversight and provided an avenue for correction to this approach.

On September 18, 2020, Governor Newsom signed Assembly Bill No. 1885 (“AB 1885”), which drastically modifies a debtor’s protection in their homestead in the event of a bankruptcy. AB 1885, which took effect January 1, 2021, makes two (2) important changes:

Makes the homestead exemption the greater of $300,000 or the countywide median sale price of a single-family home in the year prior to the year in which the judgment debtor claims the exemption, not to exceed $600,000.
Adjusts annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.

While the sharp increase in the value of the homestead exemption may be staggering at first blush, AB 1885 is adjusting state law to account for the drastic increase in property values that California has experienced over the past several years.

The Effect of a Homestead Exemption

A declared homestead limits the extent to which a subsequently recorded judgment lien, other than a judgment lien based on a judgment for child or spousal support, will attach to the declared homestead. As a result, a judgment lien attaches only to the surplus value of the property over the amount of the homestead exemption, plus the amount of all liens and encumbrances on the declared homestead at the time the abstract of judgment is recorded to create the judgment lien. (Code Civ. Proc., § 704.950; see also Code Civ. Proc., § 487.025(b).) Thus, if there is no “surplus equity” when the judgment lien is recorded, the judgment lien may not be enforced to any extent.

Additionally, the homestead exemption applies to any interest of the judgment debtor in a homestead [Code Civ. Proc., § 704.720(a)] and to all procedures for enforcement of a money judgment [Code Civ. Proc., § 703.010(a)].

In light of the foregoing, bankruptcy courts may experience an increase in bankruptcy filings for homeowners struggling with mounting debt but have built equity in their home.

The Impact on Assessment Collections

As a result of AB 1885, our office has been receiving various inquires regarding how this will impact assessment collection. In short, AB 1885 will only have an impact on an HOAs ability to satisfy a delinquent account if the delinquent Owner files bankruptcy. While AB 1885 may reduce some potential revenue sources to satisfy the debtor’s creditors, there are still various collection options available.

To ensure your HOA is taking all appropriate measures to secure debts and collect from delinquent Owners, contact your attorney for individual case analysis.

-Blog post authored by TLG Attorney, Corey L. Todd, Esq.

Pickleball Installation

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

*Asked & Answered

Asked – Several members of our association have requested that we convert a portion of our common area into a pickleball court. Does your office recommend moving forward with the installation?

Answered – Generally, no. For those who may not know, pickleball is a paddle sport that combines elements of tennis, badminton, and ping pong. Two or four players use solid paddles to hit a wiffleball over a net. It is an activity that can be played amongst all age groups and provides various health benefits and has increased in popularity in recent years. However, with its benefits comes numerous issues.

Considering that pickleball is played with a solid paddle and a wiffleball, it is an extraordinarily loud sport. Moreover, as it grows in popularity, it generally brings large gatherings of people together whose yells and cheers can be heard over great distances. This noise may result in a substantial nuisance to those within earshot and may subject the association to various lawsuits unless the pickleball courts are constructed far out of the earshot of the residences.

Unfortunately, our office has seen many associations attempting to convert croquet lawns, bocce ball courts, etc. into pickleball courts that are centrally located to other amenities provided by the association. These are typically areas which many members regularly visit as a place of quiet enjoyment and relaxation. Unfortunately, this quiet enjoyment could be severely disrupted once the pickleball courts are installed.

Even more concerning is when associations attempt to install the pickleball courts in areas immediately adjacent to residences. The owners of the surrounding homes will be routinely battered with the noise emanating from the pickleball courts. This will no doubt result in substantial frustration to those residents, may have a negative impact on their property value, and will, almost certainly, result in a nuisance lawsuit for the association.

The nuisance created by this loud sport has resulted in various lawsuits and settlement agreements costing associations tens of thousands of dollars and has severely harmed many associations’ financial wellbeing. This, in turn, is then passed back to the membership by way of increased assessments.

As such, if the association decides to move forward with the installation of the pickleball courts , it is not a matter of if, but a question of when a lawsuit may be filed. Thus, unless the association has an area far removed from the residences and other common area amenities, it is likely not worth exposing the association to the increased risk of liability.

If your association has any questions as to whether to install a pickleball court in your association, contact your attorney to provide an in-depth analysis to ensure the association is not needlessly exposing itself to liability.

-Blog post authored by TLG Attorney, Corey L. Todd, Esq.

Damage to Party Walls – Who is Responsible?

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

*Asked & Answered

Asked – Our association has two homeowners that have requested the association’s intervention to assist with resolving a dispute that has arose from damage to a shared wall. Should the Board get involved? Does the Association have any responsibility to cover the cost to repair the shared wall?

Answered – As a general matter, the Association is not obligated to intervene in this neighbor-to-neighbor dispute and is not responsible for covering the cost of the damage to the shared wall (“Party Wall”).

California Civil Code § 4775 provides the general allocation of maintenance responsibilities between associations and individual homeowners as follows, “unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, and maintaining the common area.” (Civ. Code § 4775(a)(1). Emphasis added.) The code further provides that “[u]nless otherwise provided in the declaration of a common interest development, the owner of each separate interest is responsible for repairing, replacing, and maintaining that separate interest.” (Id. at (a)(2). Emphasis added.)

In this situation, the damaged Party Wall is located between two private lots, not on the Association common area. As such, absent any provision in the association’s governing documents to the contrary, the association has no obligation to repair the Party Wall.

This point is further clarified by California Civil Code § 841(a), which states, in pertinent part: “[a]djoining landowners shall share equally in the responsibility for maintaining the boundaries and monuments between them.” Which, necessarily, would include the damaged Party Wall. This maintenance obligation extends to “reasonable costs of construction…or necessary replacement of the fence.” (Civ. Code § 841(b)(1).)

There may be circumstances where the Board of Directors (“Board”) may sympathize with the homeowners and want to intervene (eg. the damage to the Party Wall was no fault of the homeowners). While this feeling is valid and shows the Board’s virtues, the Board should remember that they are fiduciaries of the Association and must act in the best interests of the association as a whole.

The Board lacks the authority to expend association funds to repair the damaged Party Wall. The association levy’s and collects assessments from its owners for various reasons including among other things, promoting its members’ welfare, improving and maintaining association property, and discharging association obligations under their governing documents. However, covering the cost of the Party Wall, which is a separate interest, would be outside the scope of the association’s authority.

Thus, the association has no obligation or authority to intervene with this dispute and make the repairs to the damaged Party Wall. That burden lies solely with the homeowners.

In addition to the above, prudent associations adopt neighbor-to-neighbor dispute policies to offset many disputes that can likely be resolved with effort between the homeowners.

-Blog post authored by TLG Attorney, Corey L. Todd, Esq.