Articles Posted in Rules & Regulations

*Asked & Answered

Asked – How many notices do you need to give a unit owner about a rule violation before they are called to a hearing and fined?

Answered – Associations generally must provide their members with “due process” before they are able to impose disciplinary measures, such as fines, for rule violations. This due process requirement is meant to ensure that the Association’s enforcement procedures are both fair and reasonable. Two central elements of due process are (1) providing the accused notice of her alleged violation and (2) providing the accused a reasonable opportunity to be heard and to defend herself. Applebaum v. Board of Directors (1980). Notices and hearings for Association rule violations are in furtherance of the due process requirement.

Before conducting a hearing to determine whether a fine should be imposed, the Board must “notify the member in writing, by either personal delivery or first-class mail, at least 10 days prior to the [hearing].” Cal. Civ. Code Sec. 1363(h). Assuming that your Association’s governing documents do not contain a more stringent notice requirement or that your Association does not have an enforcement policy which states otherwise, this is the only violation notice required before a member may be called to a hearing and fined. This notice, however, must contain all of the information required by Civil Code Section 1363(h) (the date, time, and place of the hearing, the nature of the alleged violation, etc.). Please note that Associations are also required to annually provide their members with notice of the Association’s enforcement procedures, including its schedule of fines. Cal. Civ. Code Sec. 1363(g).

Though the Civil Code only requires that one notice of violation be given to a member before they may be called to a hearing and fined, it is a better practice for an Association to provide its members with more advanced notice and a reasonable time period (i.e., 30 days) to voluntarily correct the violation before being called to a hearing. Such a practice helps to (1) secure the cooperation of members and (2) demonstrate that the Association is acting both fairly and reasonably in enforcing its rules and restrictions.

To submit questions to Tinnelly Law Group, click here.

*New Resource

When Senate Bill 563 (“SB 563”) was signed into law this month, the fears of many people within the Community Association industry came true. The new legislation purports to provide better homeowner awareness of the affairs of their respective Associations and the ways in which those affairs are being managed by their elected Boards of Directors. However, many industry professionals and Board members are concerned that the new legislation will restrict a Board’s ability to take the actions required to efficiently address the day-to-day issues that arise within their communities.

SB 563 amends several sections of the California Civil Code–most notably Section 1363.05, known as the “Common Interest Development Open Meeting Act.” The amendments include new restrictions on actions without a meeting and what matters may be considered at a meeting. The amendments also provide new requirements with respect to meetings held in executive session as well as requirements for meetings held electronically or by teleconference.

In response to requests made by our clients and industry partners, we have published a new resource on SB 563 which outlines these new restrictions and requirements. The resource, entitled “Senate Bill 563: Boards and their Business”, is available for download from our library.

*Asked & Answered

Asked – Upon being elected to serve on our Association’s Board of Directors, our Management company gave me “Ethics Rules” to sign. These rules are not a part of our CC&Rs or our Bylaws. Am I required to sign the rules in order to serve on the Board?

Answered – Generally no. Homeowners Association (“HOA”) governing documents typically include a set of Bylaws that govern the corporate structure of the HOA and the functions and duties of its Board of Directors. It is not uncommon for Bylaws to set certain eligibility requirements for HOA members to serve as Directors. Such eligibility requirements can include, for example, ownership of property within the HOA, being current on one’s monthly assessments and not being in violation of any of the HOA’s rules or restrictions. We encourage our clients to adopt these types of eligibility requirements to help ensure those members elected to serve on the Board set a good example for the rest of the membership.

Requesting that Directors subscribe to certain “Ethics Rules” or “Codes of Conduct” is always an option available to a HOA’s Board of Directors. Such rules may help to provide guidance to new Directors who wish to better understand the scope of their responsibilities. However, in order to make subscribing to such rules a requirement to serving on the Board, it must be contained in the HOA’s Bylaws or elsewhere in the HOA’s governing documents. Every situation is different, however, and a definitive answer would require examining your HOA’s governing documents and the procedures used in adopting the Ethics Rules at issue.

To submit questions to Tinnelly Law Group, click here.

*Asked & Answered

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

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

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

To submit questions to Tinnelly Law Group, click here.