Maintenance

Association Reserve Accounts and Reserve Studies

Published on: May 6, 2013 | by Steven J. Tinnelly, Esq.

piggy bank reserve studies hoa reserve accounts.png *New Library Article

“Always be prepared.” That simple phrase sums up the importance of funding and properly maintaining a reserve account. Accidents and surprise maintenance issues will inevitably pop up. When they do, the HOA that has been properly funding and managing its reserve account will be prepared to do what is necessary to protect the interests of the HOA and its members.

Our HOA lawyers have published a new article entitled “Association Reserve Accounts and Reserve Studies.” It covers the basics of reserve accounts and reserve studies, their importance, and the relevant obligations of a HOA and its Board. The article is available for download from our library.

Legislative & Case Law Update (2013) Now Available!

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

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

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

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

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

California’s New Fire Prevention “Fee”

Published on: December 6, 2012 | by Steven J. Tinnelly, Esq.

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Homeowners in California should be expecting a new bill in their mailbox for the calendar year 2011 and onward. The California legislature has passed a controversial new Fire Prevention Fee which will aim to defray the State’s costs for fire prevention services. The new fee–argued by some to be a tax–will affect homes that are considered to be “habitable structures within the State Responsibility Area (SRA)” and within “the area of the state where the State of California is financially responsible for the prevention and suppression of wildfires.” Homeowners can check the Fire Prevention Fee website to determine if their home is located within the SRA area.

The new assessment fee for affected structures will be $150.00 per “habitable structure,” defined as “a building that can be occupied for residential use.” For affected multi-unit condominium buildings, the new regulations assess a fee of $150.00 for the first “dwelling unit” and $25.00 for each additional dwelling unit located within the building.

Condominium Associations located within the SRA that consist of multiple units may feel the biggest effect due to the new fees levied on each “dwelling unit.” Such Associations will need to determine how best to structure payment (e.g., paid by the Association as part of its annual budget or paid by each owner individually).

The content of this post was adapted from information provided by CAI’s Legislative Action Committee Blog. To read the original article, click here.

Arbitration Provisions Rise Again in Construction Defect Disputes

Published on: August 17, 2012 | by Steven J. Tinnelly, Esq.

*New Case Law hoa law firm

On August 16, 2012 the California Supreme Court announced its decision in a case that will undoubtedly impact homeowners associations (“HOAs”), developers, owners and insurers in disputes arising from construction defects. The ruling in Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC sets the stage for construction defect disputes to be resolved via binding arbitration as opposed to jury trials.

The Court’s ruling in Pinnacle reverses the lower courts’ decisions which previously hampered the enforceability of arbitration provisions contained in recorded Declarations of Covenants, Conditions and Restrictions (“CC&Rs”). Central to the Court’s ruling was its recognition that CC&Rs constitute a contract and that there is strong public policy favoring arbitration/alternative dispute resolution over litigation–a public policy which is embodied in various Civil Code provisions pertaining to HOAs.

In reaching its conclusion, the Court reasoned that “the Davis-Stirling Act ensures that [CC&Rs]–which manifest the intent and expectations of the developer and those who take title to property in a [HOA]–will be honored and enforced unless proven unreasonable. Here, the expectation of all concerned is that construction disputes involving the developer must be resolved by the expeditious and judicially favored method of binding arbitration.” Accordingly, unless an arbitration provision contained in the CC&Rs is deemed “unreasonable,” a developer is entitled to rely on the terms of the contract and the enforcement of the arbitration provision.

The ruling in Pinnacle will create far-reaching and immediate impacts in the HOA industry. Depending on the terms of the CCRs, HOAs and owners seeking to pursue claims against the original developer may now be contractually obligated to forego litigation for binding arbitration. However, Developers wishing to compel binding arbitration may be precluded from doing so to the extent that the binding arbitration provision at issue fails to meet the “reasonableness” test implied by the Court.

HOA’s Ability to Impose Assessments for Maintaining Exclusive Use Common Areas?

Published on: August 10, 2012 | by Steven J. Tinnelly, Esq.

*Asked & Answered hoa law firm

Asked – My condominium association is imposing a special assessment against all owners to reimburse it for costs incurred in repairing the structure of an owner’s leaking balcony. Because the balcony is “exclusive use common area” to be maintained by the individual owner, is my association in compliance with Civil Code §1364?

Answered – Yes, your association is in compliance with Civil Code §1364 due to the nature of the damage/maintenance at issue. Civil Code §1364 states that “the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest” (emphasis added).

However, the scope of the owner’s maintenance obligation for her “exclusive use common area appurtenant to [her] separate interest” (in this case, her balcony) extends primarily to the basic upkeep of the balcony’s usable surfaces (e.g., the surface of its flooring). Section 1364 is not intended to require the owner to undertake major structural repairs to the balcony or to otherwise ensure its structural integrity. This interpretation of Section 1364’s requirements is premised upon the recognition that (1) major maintenance decisions/efforts with respect to exclusive use common areas can have a substantial impact on neighboring units, and (2) owners typically retain no ownership interest in exclusive use common areas, despite their exclusive use rights with respect thereto.

However, if the damage was in any way caused or exacerbated by the owner’s negligence, then your association may be able to seek reimbursement for at least some of the repair costs from the negligent owner. Your condominium association’s lawyer can assist your Board in seeking reimbursement from the appropriate parties to the extent permitted under your association’s governing documents and the California Civil Code.

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

HOA Board Member Access to Homeowner Mailboxes?

Published on: July 10, 2012 | by Steven J. Tinnelly, Esq.

*Asked & Answered hoa law firm

Asked – Does our HOA Board President have the right to access our locked mailboxes in order to put a name card on the box?

Answered – No. There are no Federal statutory provisions specifically addressing this situation; however, no one except the homeowner or the postal worker is allowed to open the homeowner’s locked mailbox or even possess the keys. The logical question then becomes why would a Board even have access to locked homeowner mailboxes, notwithstanding any maintenance obligations the HOA may have with respect to the mailbox’s supporting structures. Such access likely violates a homeowner’s privacy expectations. If in using the name cards the Board is seeking to deliver mail matter to homeowners without paying postage, that itself constitutes a violation subject to fine under 18 U.S.C. 1725: “Whoever knowingly and willfully deposits any mailable matter…on which no postage has been paid, in any letter box established, approved, or accepted by the Postal Service for the receipt or delivery of mail matter…with intent to avoid payment of lawful postage thereon, shall for each such offense be fined under this title.”

HOA Boards of Directors should recognize the potential liability that attends violations of state and federal statutes. HOA Boards of Directors should thus consult with the HOA’s legal counsel in situations where the Board’s authority to engage in some desired activity is not clearly provided for in the HOA’s governing documents.

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

Association Repair and Renovation Loans

Published on: March 19, 2012 | by Steven J. Tinnelly, Esq.

hoa attorney *New Resource

As communities mature, the need for major repairs or renovations can become a major concern. Often because of unforeseen problems or insufficiently funded reserves, community associations (associations) are not capable of funding the necessary repairs immediately. In order to avoid a piecemeal repair effort in such situations, or the possibility of additional problems arising from the postponement of the repairs, it may become necessary for an association to borrow money. Fortunately, many banks have recognized this need and are willing to lend to associations for major repairs and renovations.

This blog post addresses some of the more frequently asked questions and important issues relating to association borrowing, such as the common reasons for borrowing, what a bank uses for collateral, and what effect the loan has on individual homeowners.

Our HOA attorneys have also published this information in our new resource entitled “Association Repair and Renovation Loans”, available for download from our library.

New Legislation: SB 880 – EV Charging Stations (Round 2)

Published on: March 7, 2012 | by Steven J. Tinnelly, Esq.

In November of last year we discussed the introduction of Senate Bill 209 (SB 209), in our post entitled, “Electric Vehicle Charging Stations in Your Community?” SB 209 as singed into law could be interpreted to broadly require that homeowners associations (Associations) allow electric vehicle (EV) charging stations on common areas–an apparent violation of existing California laws. Our blog post addressed SB 209’s various defects and deficiencies, and touched on a report by CAI’s Legislative Action Committee (“CLAC”) noting the need for an amendment to the law.

On February 29, 2012, Senate Bill 880 (SB 880) was signed into law as an “urgency statute.” SB 880, effective immediately, is a “clean up” measure intended to (1) correct constitutional flaws posed by SB 209, (2) resolve a conflict with Civil Code Section 1363.07, and (3) correct apparent ambiguities within the language of the statute.

HOA Liability for Third Party Criminal Acts

Published on: March 2, 2012 | by Steven J. Tinnelly, Esq.

One of the primary purposes of a Homeowners Association (HOA) is to manage and maintain the common areas within a development. Although the specific responsibilities assigned to a HOA may vary greatly depending on the terms of their governing documents, the HOA generally has a duty to act diligently and in good faith. Often times, these responsibilities include the repair and maintenance of security and safety equipment, including street lights, surveillance cameras and entry gates.

In the recent unpublished case of Girardi v. San Rafael Homeowners Association, (2012), the question arose of whether the Association may be liable for a failure to adequately maintain common area security equipment when a homeowner suffers damages from being burglarized.

Neighbor to Neighbor Enforcement of HOA CC&Rs

Published on: February 6, 2012 | by Steven J. Tinnelly, Esq.

Owners often question whether they can enforce their HOA’s CC&Rs on neighboring owners in the event that their HOA is either unwilling or unable to do so. Owners also question whether they can recover any attorney’s fees that they expend in bringing such an enforcement action.

The recent, unpublished opinion in Klein v. Nyamthi (2012) illustrates that owners may bring such enforcement actions in certain circumstances and may also recover their attorney’s fees should they prevail.

In Klein, the Defendant was violating the HOA’s CC&Rs by not fixing a landscape grading problem which ultimately caused his neighbor’s (the Plaintiff’s) home to sustain flooding damage. The Defendant violated the maintenance and nuisance provisions of the HOA’s CC&Rs by not “plant[ing] and water[ing] the slopes of [his] property, or otherwise maintain[ing] it in such a manner” as to prevent erosion and potential flooding. In recognizing that CC&Rs essentially constitute a contract between each of the owners and the HOA, the court highlighted the fact that CC&Rs are “enforceable by the owner of any lot in the development” pursuant to Civil Code Section 1354(a). Moreover, because the Plaintiff prevailed “in an action to enforce [the] CC&Rs,” in accordance with Civil Code Section 1354(c), the court ruled that the Plaintiff was “entitled to recover [attorney’s fees] as a matter of right.”

The Civil Code does provide owners the general right to enforce their Association’s CC&Rs against neighboring owners and the Association itself. However, some CC&Rs may contain provisions which limit or otherwise affect this right in certain situations. As a general rule, it is best for an owner to defer to the enforcement efforts of her Association and its Board of Directors when violations of the CC&Rs exist. Exercising “self-help” should be a measure of last resort in the rare instances where the Association is either unable or unwilling to comply with its enforcement obligations.