HOA Lawyer Blog

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.

Annual HOA Legislative & Case Law Update (2020)

Published on: January 8, 2020 | by Steven J. Tinnelly, Esq.

New-Newsletter-Tempalte-300x167 In case you missed it, Issue # 43 of our ‘Community Association Update’ newsletter is available now!

Topics covered in this issue include:

SB 323 – Elections
AB 670 – Accessory Dwelling Units
SB 326 – Balcony Inspections & Builder Defect Actions
SB 234 – Family Day Care Homes
SB 652 – Religious Items on Doors & Doorframes
HOA Liability for Failure to Uphold Maintenance Obligations
Voter Apathy Not a Required Showing in a Petition to Reduce CC&R Approval Requirements
Davis-Stirling Act Does Not Authorize ‘Continuing’ Assessment Liens

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.

New Client: Park West Association

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

Park-West-300x169 It’s our privilege to welcome Park West Association to Tinnelly Law Group’s growing family of HOA clients.

Park West is a high-rise condominium community located in the Bankers Hill area of San Diego. Residents enjoy a community rooftop deck with fabulous views of the ocean and Balboa Park.

Our HOA lawyers and staff look forward to working with Park West’s Board and management.

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.

New Client: Lake Forest No II Homeowners Association

Published on: January 2, 2020 | by Steven J. Tinnelly, Esq.

Lake-Forest-II-300x169 It’s our privilege to welcome Lake Forest No II Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Lake Forest II is a planned community of 3,436 homes located in the city of Lake Forest. Residents enjoy a 36-acre lake, Sun & Sail Club, Fitness Center, Adult Lounge, playground, tennis courts, pickleball courts, basketball courts, volleyball courts, four pools and a spa.

Our HOA lawyers and staff look forward to working with Lake Forest II’s Board and management.

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.

New Client: Hidden Crest Homeowners Association

Published on: December 17, 2019 | by Steven J. Tinnelly, Esq.

Hidden-Crest-300x169 It’s our privilege to welcome Hidden Crest Homeowners Association to Tinnelly Law Group’s growing family of HOA clients.

Hidden Crest Homeowners Association is a community consisting of single family homes. This association has beautiful homes with tree-lined streets and plenty of sidewalks throughout the community. Set against the foothills of Corona, residents of Hidden Crest enjoy the views of hills, as well as take advantage of the trails and natural areas close by.

Our HOA lawyers and staff look forward to working with Hidden Crest’s Board and management.

New Client: Turtle Rock Ridge Association

Published on: December 10, 2019 | by Steven J. Tinnelly, Esq.

Turtle-Rock-Ridge-300x169 It’s our privilege to welcome Turtle Rock Ridge Association to Tinnelly Law Group’s growing family of HOA clients.

Turtle Rock Ridge is a condominium community in Irvine with views of Shady Canyon and the Strawberry Farms golf course. Residents enjoy two community pools, spa, walking trails, parks, and tennis courts.

Our HOA lawyers and staff look forward to working with Turtle Rock Ridge’s Board and management.

Incur a Cost of $10,000 to Collect…a $2,000 Debt?

Published on: December 3, 2019 | by Steven J. Tinnelly, Esq.

*Asked and Answered

Asked – We have several members in our community that are failing to pay their monthly HOA dues and have run through several debt collection firms in an attempt to collect on these accounts. The firms we have used continuously promised us to collect the delinquency and that “the fees will be paid by the delinquent homeowner.” Well, in most of our cases, we ended up paying triple or quintuple the delinquent amount in legal fees and collection costs all to end up with nothing or a small portion of it. We have come to the point where we don’t see that “light at the end of the tunnel” and would like to know what really is the most efficient and effective way to collect delinquent assessments.

Answered – It is not uncommon to come across HOA boards that have a sour taste in their mouth left by their prior debt collection firm. This is mostly caused by firms that (1) guarantee and promise results (specifically, promises that they will get the job done and all costs will be reimbursed by the homeowner-debtor); (2) drive up their legal fees and costs; and (3) end up not being able to collect or recoup the delinquency from the debtor. This leaves the HOA to not only write off the bad debt, but to also incur costs that are exponentially higher than the original debt.

There are two (2) primary methods in which HOAs are able to collect on delinquent assessments: (a) judicially and (b) non-judicially. The former requires the involvement of the court system, consisting of a lawsuit that prays for a money judgment and/or judicial foreclosure (court ordered sale of the home). The latter is through non-judicial foreclosure (“NJF”) that does not require the court’s involvement.

Judicial Enforcement

Generally, getting the court involved increases the amount of time and money that an HOA must expend due to the added court fees, court procedures, attorney appearances, and so on and so forth. This is especially true if the homeowner decides to contest the lawsuit and file an answer, further dragging out the time and cost for resolution. Barring homeowner contest, judicial enforcement can be effective and beneficial in two (2) situations: (a) when the home is underwater (i.e., no equity), or (b) when there is senior foreclosure activity.

When the home is underwater, an HOA should not seek foreclosure because the chances of a buyer purchasing the property is slim to none, leaving the HOA to take title to the property. In this situation, a lawsuit is beneficial in that the HOA has the option to proceed with collecting on the money judgment through a variety of collection methods (e.g., bank levy, wage garnishment). This same benefit applies to the second scenario wherein the senior lender is in the process of conducting its own foreclosure sale. This is because if there is senior foreclosure activity and the HOA attempts to conduct its own sale prior to the senior’s, it is unlikely that anyone would be willing to buy the home subject to the mortgage, or even worse, to be foreclosed on by the senior.

The ability to opt to pursue a money judgment is indeed beneficial. However, boards must keep in mind that the added benefit does not come without its flaws:

Increased legal expenses, costs and time;
Subject to same NJF risks:
1. Lack of equity;
2. Senior foreclosure.
Uncollectable money judgments

Above all, should judicial enforcement fail, the HOA will not only have to write off the debt and absorb the legal fees and collection costs, but will have to do it all over again should the homeowner-debtor continue to reside at the property and fail to pay assessments. This is something that HOAs do not have to worry about when proceeding with NJF.

Non-Judicial Enforcement (i.e., NJF)

NJF is similar to judicial enforcement with the exception of two (2) crucial differences:

As to both judicial foreclosure and money judgment: It does not require court involvement and attorney appearances, saving the HOA a substantial amount of money and time; and
As to money judgment: It secures not only the delinquent amount accrued up to the date of lien recordation, but all future delinquent assessments, costs, late fees and interests accrued thereafter.

In addition to the NJF advantages listed above, NJF generally resolves the delinquent matter before it ever reaches the foreclosure sale. This is because the homeowner realizes what is at stake: his/her home and increasing collection costs, fees and interest. The California Civil Code requires HOAs to perform the following steps, among other things, prior to the foreclosure sale:

Pre-lien Letter: This informs the homeowner of the delinquency and risk of losing his/her home;
Recordation of Delinquent Assessment Lien (“Lien”);
Recordation & Service of Notice of Default (“NOD”); and
Recordation & Service of Notice of Trustee’s Sale (“NOS”).

Nine out of ten times, the delinquent homeowner will reach out and pay off the delinquency before it reaches the NOD stage, providing a resolution timetable of approximately 60 – 75 days. This is because the Lien puts a “cloud” on title of the home, preventing the homeowner from obtaining loans, refinancing his/her mortgage, and/or transferring title to the home. In the rare instances that this does not occur, the HOA can simply proceed with the sale. With a shorter turnaround time and lower legal fees and costs, NJF can be advantageous for most HOAs to utilize for assessment collection.

In most delinquent assessment matters, it is unlikely that the subject home will lack sufficient equity to recoup the HOA assessment debt, which makes NJF that much more appealing. However, as discussed, there are instances where NJF may not be a viable option. This is why it is of utmost importance that the HOA’s collection agent does its due diligence in thoroughly evaluating each account before providing a recommendation as to proceeding with judicial or non-judicial enforcement.

-Blog post authored by TLG Attorney, Andrew M. Jun, Esq.

New Client: Pacific Landing Community Association

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

Pacific-Landing-300x169 It’s our privilege to welcome Pacific Landing Community Association to Tinnelly Law Group’s growing family of HOA clients.

An exceptionally rare new home opportunity in El Segundo, Pacific Landing presents an intimate collection of luxury homes designed with sophistication in mind. Ideally located on the Westside of Los Angeles, Pacific Landing is close to shopping, dining, recreation and entertainment in charming downtown El Segundo, Silicon Beach employers, first-class schools and so much more.

Our HOA lawyers and staff look forward to working with Pacific Landing’s Board and management.

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