We are proud to announce that Renaissance at Redhawk Homeowners Association has selected Tinnelly Law Group as their association’s legal counsel.
Renaissance at Redhawk is a brand new master-planned community by Beazer Homes featuring new detached homes located in Temecula. Residents live conveniently near Redhawk Golf Course, Old Town, San Diego and Orange counties.
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Our HOA attorneys and staff look forward to working with Renaissance at Redhawk’s Board and management. |
**New Legislation
Homeowners associations are often required to disclose information to their membership. There are two forms of disclosure: general notice or individual delivery. When homeowners associations are required to deliver documents by “individual delivery” or “individual notice,” Civil Code Section 4040 permits delivery by email, facsimile, or other electronic means (“electronic delivery”) only if the recipient has consented in writing to the same. Civil Code Section 4040 also requires recipients to revoke their consent to electronic delivery in writing. SB 261 allows recipients to consent to electronic delivery and to revoke consent to electronic delivery by email. This Bill will bring the current law up-to-date with existing technology so that homeowners can easily opt in or out of electronic delivery.
Civil Code 4360 requires the Board Directors to provide general notice of a proposed rule change at least thirty (30) days before making the change to the rule. SB 261 changes that timeframe from thirty (30) days to twenty-eight (28) days. Under the new statute, the Board of Directors would be required to provide general notice of a proposed rule change at least twenty-eight (28) days before making a rule change.
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SB 261 is an example of the law evolving with technological advances. Although “snail mail” is not quite obsolete, more and more people rely on their inboxes for important news and updates. By permitting Homeowners to opt into electronic delivery with emails, HOAs should be able to more quickly and efficiently provide individual notice to their Members. |
-Blog post authored by TLG Attorney, Sarah A. Kyriakedes, Esq.
We are proud to announce that PGA WEST II Residential Association, Inc. has selected Tinnelly Law Group as their association’s legal counsel.
PGA WEST II is a master-planned community located in the La Quinta. Residents enjoy several community pools, and views of the golf courses, lakes, and mountains.
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Our HOA attorneys and staff look forward to working with PGA West II’s Board and management. |
*New Legislation 
Earlier this year, the California Legislature proposed AB 2912 (Irwin) in an effort “to protect owners in a [HOA] from fraudulent activity by those entrusted with the management of the [HOA’s] finances.” To that end, AB 2912 significantly increases the financial review requirements of HOA boards of directors, limits the ability for automatic transfer of funds without board approval, and also imposes a requirement for the HOA to purchase and maintain a fidelity bond. AB 2912 was signed on September 17, 2018 and its changes to the law take effect January 1, 2019. The following information summarizes the new state of the law in the wake of AB 2912’s passage:
Requirement for Written Board Approval of Account Transfers Above $10k:
Existing Civil Code § 5380 has been amended to prohibit the automatic/electronic transfer of funds greater than $10,000 or 5% of a HOA’s total combined reserve and operating account deposits (whichever is lower), without prior, written approval from the HOA’s board of directors. This requirement is also reiterated in new Civil Code § 5502. HOA boards that previously gave blanket consent to their managing agent for such electronic/automatic transfers should expect the need to now give written approval for such transfers (i.e., large payments to vendors of the HOA) each time a transfer is required.
Financial Review by Board Must Now be Performed on a Monthly Basis:
The law previously required the Board to review the financial information of the HOA on at least a quarterly basis. Civil Code § 5500 has been amended to now require that review to be performed on a monthly basis. Moreover, it now requires the review to include the HOA’s check register, monthly general ledger, and delinquent assessment receivable reports.
But what about HOA Boards that only meet quarterly? Fortunately, new Section 5501 was added to the Civil Code to address this issue. It provides that the financial review requirements may be met “when every individual member of the board, or a subcommittee of the board consisting of the treasurer and at least one other board member” reviews the financial information “independent of a board meeting” and that review is (a) subsequently ratified by the board at its next meeting and (b) the ratification is memorialized in the board’s meeting minutes. For HOAs that meet on a quarterly basis, there will likely be a need to form an executive finance committee of the board as contemplated by Section 5501. Such HOAs should work with their legal counsel to draft an appropriate charter for such a committee.
HOAs Now Legally Required to Purchase a Fidelity Bond:
A fidelity bond is a form of insurance protection which covers losses that the policyholder incurs as a result of fraudulent acts by individuals. It is used by a HOA to insure losses caused by the dishonest acts of the association’s employees, managers, board members or officers. Previously there was no legal requirement for HOAs to purchase fidelity bonds; however, many HOAs do so either because their CC&Rs require it and/or because it makes good business sense.
New Section 5806 is added to the Civil Code to formally require HOAs to purchase a fidelity bond. Unless a HOA’s governing documents require greater coverage amounts, the fidelity bond must be purchased and maintained in a coverage amount that is equal to or more than the combined amount of reserves of the HOA and total assessments for three (3) months. The bond must also include computer fraud and funds transfer fraud. Additionally, for HOAs that contract with a third-party managing agent or management company (which is the vast majority of HOAs in California), the HOA’s fidelity bond coverage must also include coverage for dishonest acts by the managing agent or the management company and its employees.
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HOA boards should work with their managing agents to develop a protocol for adhering to the new legal requirements regarding automatic transfers of funds and monthly financial reviews. Additionally, HOAs should contact their insurance professionals to ensure that they are carrying fidelity bond coverage which satisfies the new legal requirements. |
We are proud to announce that Del Webb at Rancho Mirage Community Association has selected Tinnelly Law Group as their association’s legal counsel.
Del Webb at Rancho Mirage is a brand new master-planned 55+ community boasting 1,026 homes at build-out. A well-appointed amenity complex, The Outlook, will feature legendary outdoor and covered pools, a fitness facility, billiards, aerobics rooms, golf simulator, and multi-purpose spaces designed to host the many activities and social clubs offered. Residents will also enjoy the more than 6 miles of meandering walking trails. In addition to the community’s amenities, golf courses, world class restaurants, shopping areas and downtown Palm Springs are just a short drive away.
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Our HOA attorneys and staff look forward to working with Del Webb at Rancho Mirage’s Board and management. |
**New Legislation
For the third time in past seven (7) years, the California Legislature has modified the laws governing the installation and use of Electric Vehicle (EV) charging stations within homeowners associations (“HOAs”). The first time was in 2011 when the Legislature enacted a new statute (now contained at Civil Code Section 4745) designed to nullify any provision in a HOA’s governing documents that prohibited homeowners from installing and using EV charging stations. In the following year, the Legislature then amended the law to give HOAs some regulatory authority in this area. That amendment served two (2) essential purposes: (1) it gave HOAs the ability to impose “reasonable restrictions” on the installation and use of EV charging stations, and (2) it clarified how the statute is primarily intended to apply to EV charging stations to be installed in a homeowner’s exclusive use/dedicated parking space.
This year (2018), SB 1016 was proposed by the Legislature. It makes some significant changes to Section 4745, and also adds new Section 4745.1 to the Civil Code to address EV Charging Station dedicated “TOU” (time of use) meters. Today, September 14, 2018, the Governor signed SB 1016 and its changes to the law will take effect January 1, 2019. The following information summarizes what HOAs should be aware of in the wake of SB 1016’s passage.
Changes to Existing Section 4745, effective January 1, 2019:
New Section 4745.1, effective January 1, 2019:
As referenced above, new Section 4745.1 will be added to the Civil Code effective January 1, 2019. It basically mirrors the provisions of Section 4745 (pertaining to EV Charging Station installations) in order to extend them to EV-dedicated “TOU” (time of use) meters. An EV-dedicated TOU meter is an electric meter supplied and installed by an electric utility, that is (a) separate from, and in addition to, any other electric meter, (b) is devoted exclusively to the charging of EVs, and (c) that tracks the time of use (TOU) when charging occurs. It is designed to aid utility companies in determining what price per kilowatt-hour should be charged for the use of an EV charging station at specific times of day.
Applications for the installation and use of EV-dedicated TOU meters must be processed in virtually the same way as applications for the installation and use of charging stations, except that the insurance requirements which apply to charging stations do not apply to EV-dedicated TOU meters. Section 4745.1 also requires HOAs to “attempt to find a reasonable way to accommodate” a request to install an EV-dedicated TOU meter, “unless the [HOA] would need to incur an expense.”
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SB 1016 is the latest example of the Legislature’s continuing trend of promoting renewable energy technologies and limiting the regulatory authority of HOAs. In our prior blog posts and newsletters on EV charging stations, we have touched on the need of every HOA (especially condominium HOAs) to work with its HOA lawyer to implement rules designed to process homeowner requests for EV charging stations in ways that comport with statutory requirements. That need is even greater now. HOAs that violate Section 4745 and/or new Section 4745.1 are subject to civil penalties and damages. |
We are proud to announce that Orangecrest Country Community Association has selected Tinnelly Law Group as their association’s legal counsel.
Orangecrest Country is a master-planned community located in the City of Riverside. When the neighborhood is complete, there will be more than 5,000 homes over 2,461 acres.
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Our HOA attorneys and staff look forward to working with Orangecrest Country’s Board and management. |
We are proud to announce that Avenue One Community Association, Inc. has selected Tinnelly Law Group as their association’s legal counsel.
Avenue One is a brand new luxury mid-rise by The Sousse’ Group located in the city of Irvine. Residents enjoy a resort-style Junior Olympic pool, spa, putting green, and views of the San Joaquin Wildlife Preserve and the city lights.
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Our HOA attorneys and staff look forward to working with Avenue One’s Board and management. |
*Unpublished Opinion
With increasing frequency, homeowners associations are confronted with members publishing content related to their association and its operations, whether on Facebook, blog posts, or other various online forums. Sometimes these publications are critical of the association board of directors, misrepresent important information and facts, or fraudulently purport to be official association publications. The various potential issues associated with member publications are seemingly endless, but California courts periodically provide clarity regarding issues that can arise in the context of member/association publications. The recent unpublished opinion of Kulick v. Leisure Village Association (2018) arose out of the publication of such member content and provides insight into how courts view and address some of these issues.
The Kulick case involved two separate lawsuits between a homeowner (“Kulick”) and his homeowner’s association (“Association”), the Association’s board of directors (“Board”), and the Association’s attorneys. Kulick, a long-time resident with a history of conflict and grievances against the Association, anonymously published and circulated newsletters (“Newsletters”) within the community in violation of the Association’s rules and regulations prohibiting anonymous publications. Kulick’s anonymous Newsletters were frequently critical of the Association Board.
The Association successfully filed suit against Kulick for intentional interference with Association insurance coverage. In response to the Association’s lawsuit, Kulick levied accusations against the Board in one of his anonymous Newsletters. In defense of Kulick’s claims, the Association (through counsel) prepared and circulated a letter (“Letter”) to each community member addressing Kulick’s specific allegations by denying Board misconduct and inviting the membership to view court filings in the pending matter. The Letter described Kulick’s most recent missive as a “reckless communication” containing “unfounded, inaccurate, and spiteful allegations” against the Association, Board, and the Association’s attorneys. It also contained details regarding the then-pending matter and the Association’s success in their preliminary injunction against Kulick. After the Letter was circulated, Kulick brought a lawsuit against the Association for defamation arising out of the Letter to the membership, among other causes of action.
The trial court dismissed Kulick’s case after the Association brought an Anti-SLAPP motion against the defamation claim (“SLAPP” stands for Strategic Lawsuits Against Public Participation; such motions are designed to protect defendants who have been sued for acts in furtherance of a constitutionally protected right of free speech or petition). On appeal, the court found that the Letter constituted “protected activity” as a public writing (i.e. circulated to all members throughout the community) in connection with an issue of public interest – the ongoing controversy of the then-pending lawsuit between the Association and Kulick. Additionally, the court found that Kulick could not demonstrate a likelihood of success on the merits because “expressions of opinion that do not include or imply false factual assertions do not constitute actionable defamation,” among other reasons. For these reasons, the appellate court upheld the trial court’s ruling against Kulick.
While the Kulick case did not ultimately address the anonymous nature of Kulick’s publications or the validity of the Association rule prohibiting them, Kulick raises important issues for associations to consider when confronted with homeowner publications, or association responses to them. While it is unclear to what extent associations can restrict member publications, such as the regulation of anonymous publications, the court in Kulick signaled an association’s ability to address specific member allegations in the public forum of the community. However, when addressing such claims, associations should be mindful of the content of these responses as certain communications are not permissible (e.g. false assertions of fact, etc.). Conversely, an association has rights against defamation published by its members and should address any member publications that defame the association, its board of directors, managing agent, or employees.
Additionally, associations should be vigilant regarding member publications that purport to be official association publications, or publications that are circulated that contain patently false information. Such publications can cause significant disruption in an association’s affairs if allowed to exist and perpetuate. Ultimately, while the line between permissible and actionable content is by no means clear and varies case by case, associations should be alert for member publications that contain clearly false assertions of fact or publications that purport to be official association communications. If you have concerns regarding member publications or appropriate association responses to them, association counsel should be contacted to review the material and discuss potential remedies to the extent they are available.
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Although Kulick is an unpublished opinion, it provides an indication of how a future court may rule in a similar situation. When confronted with member publications, homeowners associations should consider whether the published content violates any association rules and regulations, whether it contains false assertions of fact, or whether the content purports to be or could be reasonably construed as an official association publication intended to mislead the recipients and/or members. |
-Blog post authored by TLG Attorney, Tim D. Klubnikin, Esq.
We are proud to announce that Villa Madeira Property Owners Association, Inc. has selected Tinnelly Law Group as their association’s legal counsel.
Villa Madeira is a 55+ senior community located in Escondido. Residents enjoy a community clubhouse, library, swimming pool, spa, and monthly activities.
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Our HOA attorneys and staff look forward to working with Villa Madeira’s Board and management. |
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